UNIVERSITY   OF    CALIFORNIA 

COLLEGE   OF   AGRICULTURE 

AGRICULTURAL    EXPERIMENT   STATION 

BERKELEY,    CALIFORNIA 


The  Problem  of  Securing  Closer  Relationship 

Between  Agricultural  Development  and 

Irrigation  Construction 


DAVID  WEEKS  AND  CHARLES  H.  WEST 

in  cooperation  with 
THE  FEDERAL  LAND  BANK  OF  BERKELEY 


BULLETIN  435 

September,  1927 


UNIVERSITY  OF  CALIFORNIA  PRINTING  OFFICE 

BERKELEY,  CALIFORNIA 

1927 


Digitized  by  the  Internet  Archive 

in  2012  with  funding  from 

University  of  California,  Davis  Libraries 


http://www.archive.org/details/problemofsecurin435week 


THE  PROBLEM  OF  SECURING  CLOSER  RELATIONSHIP 

BETWEEN  AGRICULTURAL  DEVELOPMENT  AND 

IRRIGATION  CONSTRUCTION 

DAVID  WEEKSi  and  CHARLES  H.  WEST2 
In  cooperation  with  The  Federal  Land  Bank  of  Berkeley 


SUMMARY 

Irrigation  Development  in  California. — The  state  of  California 
comprises  100,000,000  acres.  Of  this,  29  per  cent  is  agricultural  land 
included  in  farms,  12  per  cent  is  cultivated,  5  per  cent  is  irrigated,  and 
8  per  cent  is  under  irrigation  projects  completed  or  partly  constructed. 
Of  the  total  area  of  the  state  15  per  cent  may  ultimately  be  irrigated. 
From  1909  to  1920  there  was  an  increase  of  58  per  cent  of  the  irrigated 
area  of  the  state,  but  irrigation  construction  was  provided  for  a  larger 
area. 

Lag  of  Profitable  Farming  Behind  Irrigation  Construction. — The 
total  area  projects  were  equipped  to  irrigate  in  1924  amounted  to 
6,700,000  acres.  Of  this,  1,200,000  acres,  or  about  18  per  cent,  were 
irrigable  but  not  irrigated,  and  5,500,000  acres,  or  about  82  per  cent, 
were  irrigated  but  not  all  of  this  was  fully  improved.  Only  4,750,000 
acres,  or  71  per  cent,  were  making  good  use  of  the  water.  In  the 
projects  in  the  state  400,000  acres  of  non-agricultural  land,  which  is 
nominally  assessed,  were  included.  This  land  contributes  little  revenue 
to  the  projects,  but  is  included  because  the  larger  total  acreage  results 
in  a  smaller  average  cost  per  acre  for  construction,  which  helps  in 
promotion  and  financing.  In  addition,  there  are  approximately 
1,000,000  acres  of  irrigable  land  in  projects  for  which  construction 
has  not  yet  been  provided. 

If  future  settlement  of  irrigated  land  takes  place  at  the  same  rate 
as  during  the  past  five  years,  it  will  take  from  fifteen  to  twenty  years 
to  develop  all  of  the  land  for  which  construction  has  already  been 
provided.  This  lag  between  the  date  of  construction  and  the  full 
utilization  of  the  water  is  a  costly  maladjustment  that  may  be 
accounted  for  in  many  ways. 

Possible  Causes  of  Maladjustments. — Although  it  may  not  be  pos- 
sible so  to  adjust  the  relationship  between  irrigation  construction  and 


i  Associate  in  Agricultural  Economics. 

2  Assistant  Agricultural  Economist  in  Experiment  Station. 


4  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

agricultural  development  that  delay  is  entirely  eliminated,  thorough 
knowledge  of  the  causes  underlying  the  lag  is  necessary  for  any 
improvement.  Factors  urging  irrigation  construction  operate  without 
regard  to  the  rate  of  agricultural  development.  The  cost  of  irrigation 
construction  is  continually  increasing.  Agricultural  development  is 
adversely  affected  by  the  over-supply  and  increasing  cost  of  irrigation 
construction  and  land  development.  Many  factors  that  have  no 
effect  on  irrigation  construction  retard  agricultural  development. 
Among  such  factors  are  unforeseen  costs  and  the  difficulty  of  finding 
settlers  with  adequate  capital  and  skill. 

General  business  conditions  affect  irrigation  construction  and  land 
settlement  in  opposite  ways.  There  is  a  direct  relationship  between 
the  rate  at  which  irrigation  projects  are  organized  in  California  and 
interest  rates  on  60-  to  90-day  paper  in  New  York  City  the  previous 
year.  Since  high  prices  and  high  interest  rates  tend  to  accompany 
each  other,  interest  rates  usually  reaching  their  high  point  just  after 
the  peak  of  high  prices,  irrigation  construction  tends  to  be  most  active 
during  periods  of  high  prices.  Land  settlement,  on  the  other  hand,  is 
more  active  in  periods  of  depression  and  resultant  unemployment, 
when  prices  of  all  commodities  are  low. 

Among  the  factors  urging  irrigation  construction  may  be  men- 
tioned political  influence,  booster  organizations,  the  desire  of  farmers 
to  shift  from  dry  farming  when  it  ceases  to  be  profitable,  increasing 
scarcity  of  water  rights,  and  speculation  in  land. 

Numerous  factors  operate  to  retard  land  settlement.  There  is  a 
tendency  toward  larger  projects  having  greater  economic  problems. 
Construction  costs  increase  with  each  succeeding  project.  With 
increased  costs  of  irrigation  works  and  land  development,  more  capital 
and  skill  are  required  for  success.  Capital  requirements  for  creating 
irrigated  farms  exceed  the  amount  possessed  by  prospective  settlers. 
It  is,  therefore,  more  difficult  to  find  settlers.  The  tendency  to  dis- 
regard many  of  the  important  items  of  cost  also  delays  settlement. 
Fear  of  overproduction,  at  times,  is  a  retarding  element.  Including 
within  projects  large  amounts  of  poor  land  has  a  very  undesirable 
effect  upon  the  rate  of  settlement. 

Even  with  adequate  skill  and  apparently  ample  capital,  unforeseen 
costs  often  result  in  failure.  The  items  that  make  up  the  total  cost  of 
the  producing  farms  are  (1)  cost  of  raw  land,  (2)  cost  of  irrigation 
works,  (3)  taxes  paid  before  the  land  can  use  the  water,  and  (4)  the 
cost  to  improve  and  equip  the  farm.  The  price  of  raw  land  in  irri- 
gation projects  varies  from  $50  to  $300  an  acre.    This  cost  is  known, 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  5 

but  the  cost  of  irrigation  construction  is  often  thought  of  as  paid  in 
full  when  construction  may  continue  for  years,  the  cost  of  district 
taxes  before  the  land  is  brought  into  production  is  often  completely 
overlooked,  and  the  cost  to  improve  and  equip  the  farm  is  usually 
underestimated.  The  fact  that  this  latter  cost  is  much  higher  when 
done  by  an  inexperienced  farmer,  knowing  little  about  farm  layout 
and  with  makeshift  equipment  and  insufficient  teams  and  labor,  than 
when  properly  planned  and  done  by  experts  with  good  tools  and 
equipment,  is  another  fertile  source  of  disappointment. 

Capital  requirements  at  the  present  time  are  far  beyond  the  means 
of  the  average  settler.  A  30-  or  40-acre  dairy  farm  on  land  valued 
when  undeveloped  at  $250  an  acre  represents,  when  sufficiently 
equipped  for  economical  production,  an  investment  of  more  than 
$20,000  and  necessitates  a  cash  outlay  during  this  development  period 
of  approximately  $17,000  in  excess  of  farm  income.  This  includes  land 
purchase,  development  costs,  and  family  living  until  the  farm  comes 
to  full  production.  A  part  of  the  capital  required  by  such  a  farmer 
may  be  furnished  through  existing  credit  agencies  if  his  equity  pro- 
vides sufficient  security,  and  a  share  may  be  assumed  by  the  land 
company  in  the  form  of  credit  on  the  purchase  price,  but  the  farmer 
must  have  the  balance,  or  he,  or  members  of  his  family,  must  earn  it 
by  working  outside  of  the  farm  during  the  period  of  development. 
Orchards  require  still  more  capital,  and  financial  problems  in  their 
case  are  complicated  by  the  length  of  time  needed  for  trees  to  come 
into  bearing. 

Effect  of  Price  Changes  on  Cost  of  Farm  Development  and  upon 
Repayment  of  Development  Costs. — To  construct  irrigation  projects 
in  times  of  high  prices  such  as  prevailed  during  the  war  may  make  the 
idtimate  cost  more  than  50  per  cent  greater  than  in  normal  times. 
Projects  constructed  in  times  of  a  gradual  decrease  in  the  general  price 
level  extending  over  years  will  require  a  larger  margin  between  the 
estimated  cost  and  the  sale  price  of  land  than  if  the  general  price  level 
were  rising.  Farmers  who  bought  and  developed  their  farms  in  any 
year  prior  to  1919  made  improvements  under  conditions  of  cost  which 
were  as  good  or  better  than  those  which  have  confronted  the  farmer 
making  improvements  in  any  year  since.  The  farmer  developing  prior 
to  1918  had  the  added  advantage  of  an  increased  ability  to  make 
repayment  during  the  years  1918,  1919,  and  1920,  due  to  high  prices 
for  commodities  sold.  Farmers  purchasing  farms  and  improving  them 
in  1919  and  1920  were  unfortunate  and  will  be  compelled  to  write 
off  some  of  their  invested  capital.    Although  costs  of  development  may 


6  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

be  greater,  farmers  purchasing  farms  and  making  improvements  since 
1922  may  be  able  to  make  repayment  more  easily  than  if  they  had 
purchased  and  developed  their  farms  before  the  war.  However,  the 
opposite  may  be  true.  Various  combinations  of  the  elements  of  income 
and  expenditure  give  widely  varying  results.  It  cannot  be  said  with- 
out investigating  each  particular  case  on  its  own  merits  that  it  is  more 
advantageous,  or  less  so,  to  develop  land  since  1922  than  it  was  before 
the  war. 

Overproduction. — California  agriculture  has  enjoyed  unusual  pros- 
perity. Because  much  of  the  land  in  California  is  suited  to  fruit  and 
truck  crops,  the  tendency  has  been  to  convert  general  crop  lands  into 
intensively  cultivated  fruit  and  truck  land  as  fast  as  possible.  This 
has  raised  the  question  whether  California  agriculture  can  in  the 
future  maintain  the  same  degree  of  prosperity.  Since,  however,  the 
lag  of  agricultural  development  has  been  characteristic  of  irrigation 
construction  in  the  past,  both  in  periods  of  prosperity  and  of  depres- 
sion, it  may  be  concluded  that  there  are  other  factors,  and  that  over- 
production is  not  the  primary  cause,  though  it  may  at  times  aggravate 
the  situation.  A  study  of  crop  adaptation  from  an  economic,  as 
well  as  a  physical  standpoint,  should  help  in  the  solution  of  this 
problem.  It  is  still  possible  for  some  farmers  to  develop  farms  at  a 
profit. 

Land  Qualities  Materially  Affect  the  Bate  of  Development. — A 
large  proportion  of  the  best  soils  have  already  been  provided  with 
irrigation  facilities.  Future  projects  will  include  increasingly  larger 
amounts  of  poor  soils.  These  lands  develop  slowly  because  their 
improvement  is  less  profitable  than  the  improvement  of  fertile  soils 
having  the  same  development  costs.  Moreover,  they  are  more  expen- 
sive to  improve  than  fertile  lands  largely  because  of  the  added  cost 
of  delayed  settlement.  In  one-third  of  the  irrigation  districts  of 
California,  there  is  very  little  unirrigable  land.  In  ten  districts  from 
10  to  20  per  cent  of  the  assessed  area  is  unirrigable.  In  eight  from 
20  to  30  per  cent,  and  in  four  from  30  to  40  per  cent  of  the  assessed 
area  is  unirrigable. 

Policies  of  Irrigation  and  Agricultural  Development. — The  coordi- 
nation of  agricultural  and  irrigation  development  is  difficult.  Once 
a  project  is  begun,  prompt  settlement  is  necessary.  The  problem  is 
one,  then,  of  constructing  only  projects  which  are  feasible  when  all  of 
the  elements  of  cost  are  considered,  and  of  developing  a  plan  of  land 
settlement  whereby  prompt  utilization  of  irrigation  construction  will 
take  place.    The  feasibility  of  the  project  can  only  be  determined  by 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  7 

careful  engineering  and  economic  analyses.  A  large  element  in  the 
success  of  the  projects  is  the  accuracy  with  which  the  time  required 
for  settlement  can  be  gauged  and  estimates  of  the  cost  of  delay  com- 
puted. Costs  incident  to  the  purchase  of  raw  lands  and  the  construc- 
tion of  irrigation  works  are  no  more  important  than  costs  incident  to 
holding  undeveloped  land  after  construction,  and  to  the  improving 
and  equipping  of  farms.  Feasibility  surveys  must  include  careful  soil 
surveys  to  determine  the  productive  capacity  of  the  land.  The  project 
is  not  feasible  unless  the  soils  produce  enough  to  make  farming  profit- 
able after  project  operation  and  maintenance  and  interest  on  the 
construction  cost  is  deducted.  In  making  estimates  of  costs  and  of 
income,  changing  prices  of  materials  used  in  construction  and  of 
products  sold  by  the  farmer  must  be  given  careful  attention.  Projects 
must  be  studied  with  reference  to  trends  of  production  of  crops 
adapted  to  them  and  with  reference  to  business  conditions.  In  addition 
to  determining  the  feasibility  of  irrigation  projects  and  working  out 
a  sound  land-settlement  policy,  consideration  should  be  given  to  the 
timing  of  irrigation  development  more  nearly  in  accord  with  the 
demand  for  land  by  prospective  settlers. 


INTRODUCTION 

Irrigated  agriculture  in  the  last  analysis,  is  an  economic  problem, 
and  yet,  in  over  seventy-five  years  of  California  irrigation  history, 
very  little  literature  has  been  produced  dealing  with  the  economics  of 
irrigated  agriculture.  Innumerable  publications  cover  the  technical 
problems  of  agricultural  production  and  of  irrigation  operation  and 
practice,  but  the  economic  side  of  the  problem  has  been  neglected. 
Little  information  can  be  found  that  enables  one  to  determine  whether 
irrigation  projects  have  been,  or  are  likely  to  be,  profitable  under- 
takings from  the  standpoint  of  the  owner-operator  of  the  irrigated 
farm. 

Irrigation  development  in  California  has  been  phenomenal. 
Thousands  of  comfortable  homes  have  been  established  and  paid  for 
from  the  proceeds  of  irrigated  farms ;  however,  it  is  a  familiar  fact  to 
many  living  in  the  west  that  much  irrigation  development  has  been 
unprofitable  to  those  financing  the  construction  of  irrigation  projects, 
but  the  extent  of  the  loss  sustained  is  known  only  to  students  of 
irrigation  development.  It  is  difficult  today  to  interest  private  capital 
in  any  irrigation  development.  While  little  is  known  of  the  losses  of 
private  capital  in  irrigation  construction,  there  is  still  less  information 


8  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

available  to  show  what  success  has  been  attained  by  individual  farmers 
in  the  building  of  irrigated  farms.  From  those  closely  in  touch  with 
irrigation  development  has  come  the  saying,  "It  takes  two  crops  of 
settlers  to  make  the  third  stick."  The  history  of  irrigation  develop- 
ment from  the  standpoint  of  the  settler  has  never  been  written.  Such 
a  history  would  be  a  valuable  aid  to  those  who  must  undertake  the 
development  of  farms  in  the  near  future.  In  the  development  of  farms 
from  raw  land  in  the  regions  where  irrigation  is  not  necessary,  the 
work  of  clearing,  breaking  sod,  and  other  operations  in  the  preparation 
of  the  land  for  cultivation,  do  not  require  much  cash  outlay,  and  while 
the  pioneer  may  barely  succeed  in  making  a  living  for  himself  and 
family  by  dint  of  much  hard  labor,  he  can  develop  a  farm  for  his  sons 
to  operate.  In  irrigated  agriculture,  there  is  the  additional  outlay  to 
pay  the  cost  of  storing  and  transporting  the  water  to  the  land.  When 
irrigation  was  first  practiced,  the  individual  farmers  could  construct 
their  own  canals,  but  as  large  projects  became  necessary,  the  aid  of 
outside  capital  was  enlisted.  At  that  stage,  consideration  was  given 
principally  to  the  problem  of  engineering.  Because  of  the  resulting 
failures,  it  became  necessary  to  enlist  the  aid  of  the  states  and  the 
federal  government. 

The  United  States  Reclamation  Service  in  1906  estimated  that 
completed  irrigation  works  would  cost  from  $5  to  $12  an  acre.3 
In  1925,  Congress  approved  appropriations  for  the  construction  of 
works  to  irrigate  350,000  acres  at  an  average  cost  of  $120  an  acre. 
When  irrigation  works  could  be  cheaply  provided,  there  was  sufficient 
spread  between  the  cost  of  construction  and  the  sale  price  of  improved 
land  to  justify  some  of  the  risks  involved  in  developing  a  farm.  In 
those  days  farming  was  more  a  mode  of  living  than  a  business.  Less 
capital  was  involved  and  much  of  the  family  living  was  produced 
on  the  farm.  Since  the  organization  of  the  United  States  Federal 
Reclamation  Service  and  the  successful  operation  of  the  irrigation- 
district  law  from  about  1897,  more  attention  has  been  given  to  the 
relation  of  construction  costs  to  soil  quality  and  crop  adaptability,  but 
it  was  not  until  the  close  of  the  war  that  serious  attention  was  given  to 
the  problem  of  the  settler  and  the  relation  of  the  cost  of  irrigation  to 
the  cost  of  farm  development.  We  are  just  beginning  to  realize  the 
difficulty  of  the  problem  confronting  the  settler.  Many  projects  are 
rated  as  successes  even  though  a  large  proportion  of  the  original 
settlers  failed,  because,  eventually,  after  writing  off  the  losses  and 


s  Statement  of  the  Commissioner  of  the  U.  S.  Bureau  of  Keclamation,  Dr. 
Elwood  Mead,  at  the  annual  meeting  of  the  American  Society  of  Agricultural 
Engineers,  Lake  Tahoe,  June,  1926. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  9 

making  the  necessary  adjustments,  farming  became  profitable  and 
flourishing  communities  were  established.  In  considering  the  success 
of  the  community,  the  failures  of  the  individual  have  been  overlooked. 
If,  however,  by  planning,  regulation,  or  education,  the  growth  of 
agriculture  under  irrigation  may  take  place  in  such  a  manner  as  to  be 
more  profitable  to  the  individual,  the  results  will  be  beneficial  to  the 
state  in  every  way. 

Projects  that  are  now  constructed  involve  a  large  investment 
extending  over  a  long  period  of  years.  The  engineering  feasibility  has 
usually  been  carefully  determined,  and  detailed  study  made  of  that 
part  of  the  construction  costs  which  will  be  undertaken  in  the  next 
ten  or  fifteen  years,  which  may  be  only  a  third  or  a  half  of  the  ultimate 
required  construction.  The  agricultural  and  financial  problems  of  the 
individual  and  the  economic  and  agricultural  problems  of  the  project 
as  a  whole  are  scarcely  considered.  Contrast  with  this  the  statistical 
analysis  involved  in  projecting  the  expansion  of  one  of  our  large 
public  utilities.  Because  of  the  magnitude  of  the  projects  to  be  built 
in  the  future,  the  risk,  both  to  the  individual  and  to  the  project 
administration,  is  greater  and  demands  more  study  and  planning  of 
all  phases  of  the  problem. 

This  bulletin  outlines  the  economic  problems  involved  in  the 
development  of  agriculture  under  irrigation.  Part  I  has  been  pre- 
pared to  give  a  general  statement  of  important  characteristics  of 
irrigation  development  with  an  analysis  of  the  degree  to  which  irri- 
gation works  have  been  constructed  and  utilized.  Part  II  contains  an 
analysis  of  the  factors  that  have  most  effect  upon  the  lag  of  agricul- 
tural development  behind  irrigation  construction.  One  of  the  prin- 
cipal causes  of  delay  in  settlement  is  lack  of  knowledge  concerning 
the  costs  of  land  development,  and  another,  the  amount  of  capital 
needed  to  undertake  the  development  of  land  when  favorable  con- 
ditions exist.  In  presenting  the  discussion  on  this  subject,  the  writers 
had  two  objects  in  view,  first  to  show  the  economic  factors  involved 
and  their  relation  to  retarded  development,  and  secondly  to  present 
the  material  in  sufficient  detail  to  be  a  guide  to  farmers  anticipating 
the  purchase  of  land  in  irrigation  projects  of  this  state. 


10  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Part  I.  The  Irrigation  Situation  in  California 

Since  the  beginning  of  irrigation  development  in  1850,  more  than 
7,000,000  acres  have  been  included  in  irrigation  projects  in  California. 
Not  all  of  this  area,  however,  has  been  completely  utilized.  In  1924 
about  5,500,000  acres  were  using  the  water  provided  by  the  projects. 
A  portion,  amounting  to  about  400,000  acres,  is  not  suitable  for  irri- 
gation, and  about  1,200,000  acres  of  land,  provided  with  a  water  supply 
which  is  suitable  for  irrigation,  have  not  been  irrigated.  Of  the 
5,000,000  acres  irrigated,  750,000  acres  are  not  farmed  intensively 
enough  to  meet  the  costs  incident  to  farm  operation  and  the  payment 
of  irrigation  taxes. 


TREND  OF  IRRIGATION  DEVELOPMENT 

Prior  to  1850,  cattle  raising  was  the  principal  industry  in  Cali- 
fornia. Then  came  an  era  of  enormous  dry-farmed  grain  enterprises 
on  the  virgin  soils  of  the  great  interior  valley.  Irrigation  was  prac- 
ticed to  some  extent  by  1856  and  has  increased  steadily  since.  Figure  I 
shows  the  trends  in  the  area  of  improved  land  and  in  the  area  of 
irrigated  land  from  1850  to  1920. 

The  period  from  1909  to  1919  was  one  of  great  expansion.  The 
irrigated  area  of  the  state  increased  58  per  cent.  More  than  one  and 
one-half  million  acres  of  new  land  were  brought  under  irrigation  and 
29,743  new  farms  were  created.  In  these  ten  years,  more  land  was 
brought  under  irrigation  in  California  than  in  any  other  three  western 
states.  The  irrigable  area  of  the  state  included  in  projects  and  not 
irrigated  increased  720,152  acres,  or  75.3  per  cent,  amounting  to 
1,675,426  in  1919,  according  to  the  U.  S.  Census. 

From  1919  to  1925,  there  has  been  less  irrigation  construction,  the 
tendency  being  to  develop  projects  begun  rather  than  to  commence 
new  ones.  It  is  estimated  that  the  irrigated  area  of  the  state  has  in 
five  years  increased  500,000  acres. 

Land  Irrigated  in  1919. — The  U.  S.  Census  reports  4,219,040  acres 
irrigated  in  California  in  1920  and  the  area  enterprises  were  capable 
of  irrigating  as  5,894,466. 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


11 


Professor  Frank  Adams  of  the  University  of  California,  cooperat- 
ing with  the  Division  of  Irrigation  Investigations,  United  States 
Department  of  Agriculture  and  the  State  Department  of  Public  Works, 
in  preparing  the  irrigation  map  of  California  in  1919,  mapped  all  of 
the  land  provided  with  irrigation  ditches  still  in  condition  for  use. 

Growth  of  Area  in  Improved  Farm  Land  and  in  Irrigated  Farm  Lands  in 

California 


jp'O 

5 

"*• — Impr 

oved   Ft 

jrm   La 

nd 

\ 

k    1 

Irr 

gated  , 

~arm  Lc 

mds 

*s 

^s 

y 

s 

^.a*1 

s 

o 

.^ 

00~~ 

Fig.  1. — Data  for  area  of  improved  farm  land  from:  Department  of  Com- 
merce Bureau  of  the  Census.  State  compendium  California.  1921:63,  table  2. 
1924. 

Data  for  area  in  irrigated  farm  lands  from:  Department  of  Commerce 
Bureau  of  the  Census.  State  compendium  California.  1920:99,  table  2.  1924. 
The  irrigated  area  in  1919,  according  to  the  census,  is  4,219,040  acres.  The 
U.  S.  Division  of  Irrigation  Investigations  gives  5,030,986  acres  as  the  irrigated 
area  in  California  in  1919. 

It  was  found  that  "5,999,300  acres  had  been  and  was  being  served 
when  water  was  available. ' H  This  figure  has  been  reduced  to  5,030,986 
acres  by  subsequent  planimeter  readings  made  by  the  United  States 
Division  of  Irrigation  Investigations.5 


4  Fletcher,  Austin  B.  California  Dept.  Public  Works.  Biennial  Rept.  1922 
(part  3)  :53.     1922. 

s  Hutchins,  Wells  A.  Comparison  of  figures  on  irrigated  land.  U.  S.  Divi- 
sion of  Irrigation  Investigations  and  Bureau  of  the  Census.  (Typewritten  rept.) 
8p.     1921. 


12  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

The  classification  used  in  the  preparation  of  the  map  is  as  follows : 

(a)  "all  land  irrigated  during  the  season  in  which  the  field 

investigation  was  made; 

(b)  "all  land  irrigated  in  recent  years  (generally  within  the 

past  five  years)  and  which,  though  not  irrigated,  would 
evidently  be  irrigated  again  in  the  near  future ; 

(c)  "all  land  ditched  and  checked  or  otherwise  prepared  for 

which  a  water  supply  was  visible." 
The  discrepancy  between  the  figure  of  the  census  and  the  estimate 
made  by  the  Division  of  Irrigation  Investigations  is  summarized  by 
Hutchins.6  The  two  sets  of  figures  do  not  purport  to  show  the  same 
thing.  The  census  shows  the  land  irrigated  in  1919,  while  the  survey 
of  the  Division  of  Irrigation  Investigations  show  not  only  land  irri- 
gated in  1919  but  also  land  which  had  been  irrigated  in  previous  years 
when  more  water  was  available,  and  also  land  for  which  there  was  a 
visible  water  supply  prepared  for  irrigation  for  the  first  time  in  1920 
and,  in  some  sections  of  the  state,  in  1921.  Differences  in  the  basis 
of  classification  accounts  for  a  large  additional  acreage  obtained  by 
this  survey.  Census  enumerators  in  parts  of  the  Sacramento  Valley 
and  in  Southern  California  failed  to  report  all  of  the  land  irrigated. 
The  Division  of  Irrigation  Investigations  believes  that  their  figures 
"are  much  nearer  the  truth  than  are  the  census  figures  due  to  the 
thorough  field  investigations  ....  and  to  the  fact  that  information 
given  by  outside  persons  was  not  accepted  without  a  satisfactory  check 
of  its  reliability." 

Recent  Increase  in  Area  of  Reclamation  and  Irrigation  Districts. — 
Since  1913,  the  area  in  irrigation  districts  in  California  has  increased 
more  than  400  per  cent.  In  the  Sacramento  Valley  the  area  in 
reclamation  districts  increased  250  per  cent  since  1910,  and  in  the 
Delta  of  the  San  Joaquin  and  Sacramento  rivers,  80  per  cent.  The 
increase  in  both  types  of  districts  amounted  to  2,770,000  acres. 

In  the  Sacramento  Vallej^  and  the  Delta  area  the  problem  has  been 
one  first  of  flood  protection,  and  second  of  irrigation.  Reclamation, 
in  the  sense  of  flood  protection,  has  been  provided  by  the  organization 
of  reclamation,  levee  and  drainage  districts.  At  first  reclamation  in  the 
Sacramento  Valley  was  haphazard,  for  there  was  no  general  plan  of 
flood  control.  In  1894,  the  California  Debris  Commission  was  created 
by  the  federal  government  to  supervise  placer  mining  and  protect 
navigation.  In  1911  the  State  Reclamation  Board  was  organized,  and 
in  1913  the  Sacramento  and   San  Joaquin  Drainage  Districts  was 


e  Loc.  cit. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION 


13 


Acreage    Included    in    Reclamation,    Levee,    and    Drainage    Districts 
Sacramento  Valley,  Reclamation  Projects  in  the  Delta  Area, 
and  the  Combined  Acreage  in  Both  erom  1865  to  1925 


// 


IN 


io 


I- 


/ 

^                              ■ 

i 
/ 
i 

/ 

/ 

s* 

S" 

,./ 

,./         / 

/ 
/ 
/ 

_/ 

, — " 

s 

/  f* 
// 

I 

ij       " 

1 

'"" 

,^*"""~ 

y 

/J 

#-- 

— * 

I8GS  75  85 

Sacramento  Va/ley 
Def-ra    Areas 
Combined    Areas 


1905 


15 


Fig.  2. — Sonic  reclamation  districts  have  changed  their  boundaries  many 
times.  It  is  impracticable  to  determine  the  exact  area  of  each  district  each 
year.  The  area  of  these  in  1924  was  used  throughout  with  date  of  original 
organizations  in  making  the  curves  above.  The  delta  area,  comprising  423,000 
acres,  has  334,000  acres  included  in  reclamation  districts,  and  89,000  acres  in 
privately  owned  projects.  It  was  assumed  that  private  development  in  this 
area  took  place  about  as  rapidly  as  the  development  through  reclamation  dis- 
tricts, and  the  curve  above  includes  both.  In  the  Sacramento  Valley,  there 
are  768,763  acres  included  in  reclamation,  drainage  and  levee  districts,  all  of 
which,  while  differing  in  organization,  serve  practically  the  same  purpose. 
Practically  all  the  land  in  the  Sacramento  Valley  including  the  Delta  area, 
which  is  subject  to  flood  menace,  is  now  included  in  the  organized  districts. 


14  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

formed  for  the  purpose  of   carrying  out  the   plan  of   reclamation 
adopted  by  the  state  and  federal  governments. 

In  the  Sacramento  Valley  there  were  about  200,000  acres  of  land 
in  organized  reclamation  districts  in  1911,  and  from  1911  to  1922, 
approximately  500,000  acres  more  were  included  in  active  districts. 
In  the  Delta,  comprising  423,000  acres,  approximately  190,000  acres 
of  new  lands  were  included  in  districts  between  1910  and  1922.  The 
curves  in  figure  2  show  the  amount  of  lands  that  were  included  in 
reclamation,  levee,  and  drainage  districts  in  the  Sacramento  Valley 
and  in  reclamation  projects  in  the  Delta  area,  and  combined  develop- 
ment in  both  areas.  The  curves  show  a  rapid  increase  in  the  organi- 
zation of  reclamation  districts  in  the  overflow  area  of  the  Sacramento 
River  since  1910,  and  particularly  since  the  beginning  of  the  war. 
Practically  all  of  the  lands  in  the  Sacramento  Valley  and  Delta  area 
that  were  subject  to  overflow,  have  now  been  included  in  reclamation, 
levee,  or  drainage  districts,  and  although  only  part  of  the  land  is  now 
irrigated,  no  doubt  most  of  it  will  eventually  be  brought  under 
irrigation. 

The  curve  in  figure  3  shows  the  varying  amounts  of  land  included 
in  active  irrigation  districts  since  1887.  In  1913  there  were  approxi- 
mately 640,000  acres  in  irrigation  districts,  but  since  that  time, 
2,080,000  acres  of  new  land  have  been  included.  There  were  in  1924, 
sixty-five  irrigation  districts  that  own,  or  are  constructing,  their  own 
irrigation  system,  and  that  have  a  combined  area  of  2,719,000  acres. 
Most  irrigation  districts  have  been  organized  to  expand  or  increase 
the  efficiency  of  existing  irrigation  systems.  To  improve  this  service 
and  increase  canal  capacity,  however,  has  required  much  new  con- 
struction involving  large  expenditures. 

Analysis  of  the  Character  of  Recent  Development. — Irrigation 
development  in  this  state  will  in  the  future  require  the  construction 
of  large  projects  and  these,  no  doubt,  will  be  built  by  irrigation  or 
water-storage  districts.  Since  1910,  pumping  machinery  has  been  used 
extensively  by  irrigation  projects  obtaining  their  water  from  streams 
and  lakes,  and  is  increasing  in  importance.  Together  with  storage,  it 
will  inevitably  be  the  chief  factor  in  irrigation  expansion.  There  are 
approximately  1,000,000  acres  irrigated  by  wells  and  individual  pump- 
ing plants,  and  the  balance  is  irrigated  from  streams  and  lakes.  The 
use  of  wells  for  irrigation  purposes  is  comparatively  a  recent  develop- 
ment. Between  1909  and  1919,  500,000  acres  of  new  land  were  brought 
under  irrigation  from  this  source.  The  limit  of  available  ground 
water,  however,  is  being  approached. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION 


15 


Although  the  1919  census  shows  only  20,351  acres  of  land  to  be 
entirely  dependent  upon  storage,  a  much  larger  area  is  supplied  by 
gravity  supplemented  by  storage,  and  in  the  future,  storage  will  neces- 
sarily be  the  chief  source  of  supply.  Table  1  is  presented  to  show  the 
character  of  development  which  had  taken  place  prior  to  1919  with 
particular  reference  to  the  source  of  irrigation  supply. 

Area  Included  in  Irrigation  Districts  Each  Year  Since  1887 


z 


1885 


1900 


t915 


1930 


Fig.  3. — On  account  of  the  numerous  changes  in  the  boundaries  of  irrigation 
districts,  it  was  necessary  to  use  the  present  area  of  the  districts  in  making  the 
curve  shown  above.  These  data  for  1924  include  all  of  the  districts  (65  in 
number)  that  own  or  are  constructing  their  irrigation  systems. 


16 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

TABLE   1 


Irrigated  Area  of  California  1909  and  1919  from  Each  Source  of  Water 
Supply  and  the  Percentage  of  Increase  in  Irrigated  Area  from  Each 
Source  of  Supply.  Also  Undeveloped  Irrigable  Area  for  which  Irrigation 
Works  are  Constructed 


Irrigated  by 


Acres 
1919 


Per  cent 
of  total 


Acres 
1909 


Increase 


Per  cent 

of 
increase* 


Propor- 
tion of 
total 
increasef 


Gravity: 

Streams 

Lakes 

Springs 

Storage 

Total  gravity 

Gravity  and  pumped 

Pumped: 

Streams 

Lakes 

Total  pumped 

Wells: 

Pumped 

Flowing 

Flowing  and  pumped 

Total  wells 

Gravity  and  wells 

Miscellaneous 

Grand  Total 

Acreage  enterprises  were  capable  of 

irrigating 

Irrigable  area 

Acreage  included  in  enterprises 


:,564,445 
48,084 
27,698 
20,351 

,660,578 
60,278 

295,673 

4,168 

299,841 

826,846 
17,653 
23,561 

868,060 
92,152 

238,131 

,219,040 

,894,466 
,675,426 
,805,207 


60.78 
1.14 
0.66 
0.48 

63  06 
1.43 

7.01 
0.10 
7.11 

19.6 
0.42 
0.55 
20  57 
2  18 
5  65 
100  00 


2,216,757 
15,896 
31,799 
16,410 

2,280,862 
60,278 

29,965 

2,574 

32,539 

276,595 
74,128 
0 
350,723 
0 
0 
2,664,124 

3,619,378 

955,274 

5,490,360 


347,688 

32,188 

-4,081 

3,941 

279,736 


265,708 

1,594 

267,302 

550,251 
-56,475 

23,561 
517,337 

92,152 

238,131 

1,554,936 


15.68 
202.50 
-12.84 

24.02 


886.73 

61.93 

821.48 

198.94 
-76.19 

0 
147.50 

0 

0 


22.36 
2.07 

0.25 

24  42 

3  88 

17.08 
0.10 
17.18 

35.38 

1  52 

33  27 

5  94 

15  32 

100  00 


*  Percentage  is  obtained  by  dividing  increase  by  1909  area  and  expressing  as  a  percentage, 
t  Proportion  of  total  increase  is  obtained  by  dividing  the  increase  in  any  class  by  1,554,936,  the  grand 
total  increase  from  1909  to  1919. 


IRRIGABLE  LAND  IN  CALIFORNIA  IRRIGATION  PROJECTS 
WHICH  WAS  NOT  IRRIGATED  IN  1924 

It  is  estimated  that  in  1924  approximately  1,200,000  acres  of 
irrigable  land  in  irrigation  projects  of  the  state  were  ready  to  be 
prepared  for  irrigation.  The  following  discussion  shows  the  distri- 
bution of  this  land  according  to  the  type  of  projects  in  which  it  is 
located. 

Irrigation  Districts. — Of  the  gross  area  of  2,719,000  acres  included 
in  sixty-five  irrigation  districts  in  1924,  2,257,000  may  ultimately  be 
irrigated.  Of  this,  1,877,000  acres  were  provided  with  irrigation 
facilities  and  1,475,000  acres  were  irrigated.  Table  2  shows  the  general 
distribution  of  irrigable  land  included  within  California  irrigation 
districts  in  1924  which  was  not  irrigated  in  that  year. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION 


17 


The  difference  between  the  two  figures  is  approximately  400,000 

acres,  the  amount  of  good  land  provided  with  irrigation  facilities  and 

included  in  the  irrigation  districts  of  the  state,  which  is  not  using  the 

water.7 

TABLE  2 

General  Distribution  of  Irrigable  Land  Included  within  California 

Irrigation  and  Eeclamation  Districts  in  1924  which 

Was  Not  Irrigated  in  that  Year 


Reclamation  districts  of  the 
Delta  region 

Reclamation  districts  of  the 
Sacramento  Valley 

California  irrigation 
districts 

Irrigable  acreage 
unirrigated 

Number  of 
districts 

Irrigable  acreage 
unirrigated 

Number  of 
districts 

Irrigable  acreage 
unirrigated 

Number  of 
districts 

0-999 

52 

0-999 

10 

0-999 

24 

1000-1999 

3 

1000-1999 

6 

1000-1999 

12 

2000-2999 

2 

2000-2999 

0 

2000-2999 

4 

3000-3999 

1 

3000-3999 

1 

3000-3999 

3 

4000-4999 

2 

4000-4999 

2 

4000-4999 

5 

5000-5999 

1 

5000-5999 

5 

5000-9999 

6 

10000-14999 

2 

10000-14999 

4 

15000-19999 

3 

15000-19999 

1 

20000-24999 

1 

20000-24999 

0 

25000-29999 

0 

25000-29999 

1 

30000-34999 

1 

30000-34999 

1 

35000-84999 

0 

35000-39999 

0 

85000-89999 

1 

40000-134999 
135000-139999 

0 

1 

Reclamation  Districts. — The  reclamation  districts  of  the  state  are 
principally  in  the  Delta  area  and  in  the  Sacramento  Valley.  A  few 
are  scattered  throughout  the  state,  but  most  of  these  are  included  in 
other  projects  and  their  irrigable  area  is  accounted  for  in  the  figures 
for  the  other  types  of  organization. 

In  the  Sacramento  Valley  the  reclamation,  levee,  and  drainage 
districts  have  an  area  of  768,763  acres,  of  which  approximately  700,000 
acres  may  ultimately  be  irrigated.  In  1924,  580,000  acres  were  con- 
sidered irrigable  and  300,000  acres  were  irrigated.  The  difference, 
280,000  acres,  is  the  irrigable  area  not  irrigated  but  provided  with 


7  In  estimating  the  area  ultimately  irrigable,  lands  entirely  unsuited  to 
irrigation,  as  well  as  townsites,  roads,  canals,  and  railroad  rights  of  way  were 
deducted  from  the  gross  area  within  the  the  irrigation  projects.  The  irrigable 
area  of  1,877,000  in  1924  included  only  land  having  an  adequate  water  supply 
and  ample  irrigation  facilities;  alkali  land  and  poorly  drained  land  were 
excluded.  Lands  fall-irrigated  prior  to  seeding  of  dry  grain  and  lands  having 
a  large  annual  cost  for  irrigation  but  used  temporarily  for  pasture  were  not 
considered  irrigated.  Rice  lands  are  usually  planted  to  rice  for  two  years  in 
succession  and  then  fallowed  one  year,  or  are  planted  to  rice  every  other  year. 
In  rice  districts,  therefore,  the  area  actually  growing  rice  was  doubled  to  deter- 
mine the  irrigated  area.  General  crop  and  fruit  lands  that  are  sub-irrigated 
and  orchards  that  are  irrigated  only  in  dry  years  were  included  as  irrigated  lands. 


18  UNIVERSITY   OF    CALIFORNIA EXPERIMENT    STATION 

irrigation  equipment  in  the  reclamation  districts  of  the  Sacramento 
Valley.8  Table  2  shows  the  general  distribution  of  irrigable  land 
included  within  reclamation  districts  of  the  Sacramento  Valley  in  1924 
which  was  not  irrigated  in  that  year. 

About  one-third  of  the  lands  in  the  Delta  area  are  irrigated  by 
siphoning  and  two-thirds  by  pumping  from  the  river  where  the  lift  is 
only  a  few  feet.  Reclamation  here  is  practically  completed,  and 
because  of  the  relatively  small  cost  to  provide  these  lands  with  irri- 
gation facilities,  those  producing  crops  have  been  considered  irrigable. 
Of  the  423,000  acres  in  the  Delta  area,  338,400  acres,  or  80  per  cent, 
produced  crops  in  1924,  but  only  260,000  acres  were  irrigated.  The 
78,400  acres  of  dry-farm  crops  on  these  expensively  leveed  lands  have 
been  considered  irrigable.  Table  2  shows  the  general  distribution  of 
irrigable  land  included  within  reclamation  districts  of  the  Delta 
region  in  1924  and  not  irrigated  in  that  year. 

These  78,400  acres  in  the  Delta  area,  added  to  the  280,000  acres  in 
the  Sacramento  Valley,  give  a  total  of  350,000  acres  irrigable  but  not 
irrigated  in  the  reclamation  districts. 

Mutual  and  Public-Utility  Water  Companies. — There  are  certain 
large  mutual  and  public-utility  water  companies  outside  the  irrigation, 
reclamation,  and  water-storage  districts  which  can  irrigate  more  land 
than  they  serve  at  present.  This  additional  irrigable  area  is  estimated 
at  75,000  acres. 

Water-Storage  Districts. — The  direct  flow  from  the  Kings,  Kern, 
and  San  Joaquin  rivers  is  all  appropriated  and  put  to  beneficial  use. 
The  irrigated  area  on  these  streams  can  be  increased  by  the  creation 
of  the  water-storage  districts  that  are  being  developed,  or  by  the  use 
of  ground  water  which,  however,  is  approaching  the  limit  of  profitable 
development.  In  these  areas  there  is  practically  no  irrigable  land  now 
provided  with  a  water  supply  which  is  unimproved. 

Individual  and  Partnership  Enterprises. — The  above  figures  do  not 
include  the  irrigable  area  in  individual  or  partnership  enterprises. 
The  land  served  by  wells  and  small  gravity  diversions  is  of  this  class. 
In  1919,  the  census  reported  515,000  acres  irrigable  by  these  small 
systems,   but   not  yet   using   the   water.     From   1919   to    1924   the 


8  It  will  require  relatively  a  small  expenditure  to  provide  irrigation  facilities 
for  the  120,000  additional  acres  that  are  irrigable.  Certain  landowners  have 
not  cared  to  use  the  water  and  consequently  the  distribution  systems  have  not 
been  constructed  to  serve  them.  However,  since  these  parcels  are  not  con- 
tiguous and  the  distribution  systems  extend  all  around  them,  the  cost  of  com- 
pleting the  systems  will  be  small.  The  largest  expenditure  will  be  for  the 
completion  of  reclamation.  The  area  considered  irrigable  in  1924,  580,000 
acres,  was  that  for  which  irrigation  construction  had  actually  been  provided. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  19 

undeveloped  irrigable  area  in  large  projects  decreased  286,000  acres. 
At  the  same  rate  of  decrease  in  the  undeveloped  irrigable  land  served 
by  individual  ownerships,  375,000  acres  of  such  land  was  irrigable 
and  undeveloped  in  1924. 

Totally  Undeveloped  Irrigable  Land. — Summarizing  the  area  of 
undeveloped  irrigable  lands  in  irrigation  and  reclamation  districts, 
mutual  and  public-utility  companies  and  individual  and  partnership 
ownerships,  we  have  a  total  of  1,200,000  acres  of  irrigable  lands  within 
projects  which  are  not  irrigated.  A  summary  of  these  figures  is  given 
in  table  3. 

TABLE  3 
Acreage  of  Undeveloped  Irrigable  Land* 

Acres 

Irrigation  districts 400,000 

Reclamation  districts 350,000 

Mutual  public  utility  companies 75,000 

Individual  and  partnership  ownerships  not  irrigated 375,000 

Total  irrigable  area  not  yet  improved 1,200,000 

*  These  figures  show  merely  the  land  for  which  irrigation  construction  and  a  water  supply  has  been 
provided  which  is  of  a  similar  quality  to  lands  now  irrigated  in  the  various  projects.  No  attempt  has 
been  made  to  point  out  how  much  of  this  it  is  profitable  to  develop  under  present  economic  conditions. 
Conceivably,  the  area  suitable  to  economic  development  may  fluctuate  from  zero  to  the  entire  area  as 
economic  conditions  change  from  extreme  depression  to  extreme  prosperity.  However,  the  owners  of 
this  land  are  now  paying  taxes  for  a  service  that  is  not  being  used.  Much  of  the  undeveloped  irrigable 
land  is  dry-farmed  grain  land. 

In  California  there  is  much  irrigated  land  that  is  unimproved  or 
only  partly  improved.  Most  of  the  irrigated  grain  is  grown  on  good 
land  that  has  not  yet  been  leveled  and  checked  and  some  of  the 
irrigated  pasture  is  similar  land.  Much  leveling  and  checking  is 
imperfectly  done  the  first  time  and  must  be  improved  from  year  to 
year  until  it  is  satisfactory.  It  is  impossible  to  determine  the  amount 
of  partly  leveled  land  in  the  state  growing  crops,  but  the  area  is  large. 
Some  soils,  though  properly  leveled  and  checked,  are  deficient  in 
humus  and  other  available  plant  foods  and  therefore  fail  to  produce 
good  crops  for  several  years  until,  through  cultivation  and  cropping, 
these  deficiencies  are  eliminated.  The  gradual  building  up  of  agricul- 
tural production  on  newly  irrigated  land  by  improving  the  leveling, 
checking,  and  ditching,  and  increasing  the  soil  fertility  through  crop- 
ping is  a  common  observation.  Good  irrigated  land  is  built  up ;  it  is 
not  produced  in  one  season.  The  area  being  irrigated  includes,  then, 
much  land  which  is  utilized  for  grain  and  pasture  or  which  is  devoted 
to  the  production  of  crops  which  might  give  good  returns  under 
intensive  farming  methods  and  fully  prepared  land,  but  which  in  their 
present  condition  are  not  producing  sufficiently  to  pay  the  expense  of 
operation. 


20 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Land  Devoted  to  Irrigated  Crops  Not  Yet  Completely  Developed. — 
Besides  the  irrigated  grain  land  which  is  practically  unimproved  so  far 
as  irrigation  is  concerned,  there  is  a  large  area  devoted  to  irrigated 
crops  not  yet  farmed  intensively  enough  to  pay  the  expenses  of  farm- 
ing. This  fact  was  brought  out  through  a  cooperative  research  carried 
on  by  the  Federal  Land  Bank  of  the  Eleventh  District  and  the 
University  of  California.  In  this  investigation  933,605  acres  were 
included.  This  was  all  within  irrigation  and  reclamation  districts. 
Of  this  area,  347,822  acres  were  classified  in  detail.     Farm  economic 

TABLE  4 

Land  Utilization  in  the  Delta,  in  Keclamation  Districts  of  the  Sacramento 
Valley,  and  in  Irrigation  Districts*  1924 


Crops 

Delta 
area 

Sacramento 
Valley 

Irrigation 
districts 

Duplicated 
areaf 

Net 
total 

Irrigated  lands: 

Acres 
16,180 

212,088 

30,928 

1,035 

Acres 
63,235 
55,000 
5,628 
22,920 
76,357 

223,140 

0 

0 
301,074 
244,549 
545,623 

Acres 

272,518 

970,959 

136,428 

51,716 

35,479 

1,467,100 

18,320 

32,027 

142,499 

1,059,113 

1,251,959 

Acres 
3,190 
9,118 
3,822 
22,515 
32,177 
70,822 

0 

0 
25,638 
89,818 
115,456 

Acres 
348,743 

1,228,929 

169,162 

53,156 

79,659 

260,231 

0 

0 

78,416 

84,353 

162,769 

1,879,649 

Unirrigated  lands: 

18,320 

32,027 

496,351 

Idle 

1,298,197 

1,844,895 

Total  unirrigated  and  irrigated  area 

423,000 

768,763 

2,719,059 

186,278 

3,724,544 

*  Along  the  river  where  the  land  has  recently  been  flooded,  the  dry-farmed  grain  crops  are  very 
good.  Crop  data  are  based  upon  1924  records  of  land  irrigated  from  Sacramento  River,  reported  by 
Water  Supervisor  of  the  Sacramento  River,  and  upon  field  observation  in  going  over  the  area.  Crop 
data  for  the  irrigation  districts  were  obtained  from  the  offices  of  the  various  irrigation  districts. 

t  Irrigation  and  reclamation  districts  in  California  overlap.  The  duplicated  area  is  that  part  of 
Reclamation  District  No.  2047  included  in  irrigation  districts. 


investigations  were  made  to  substantiate  the  classification.  On  the 
basis  of  this  more  intensive  classification,  the  whole  area  was  classified 
as  to  quality  of  land  utilization.  These  districts  are  representative 
of  the  irrigation  districts  of  the  state  as  a  whole,  although  the  two 
oldest  districts  are  not  included.  Some  of  the  projects  were  recently 
constructed,  some  are  from  six  to  ten  years  old,  and  two  are  large, 
well-established  projects  that  have  been  in  existence  many  years.  The 
irrigated  agriculture  was  mapped  to  show  the  area  producing  good, 
fair,  and  poor  crops.  The  area  of  dry  grain  and  idle  land  was  also 
determined.  Studies  were  made  of  the  financial  condition  of  farms 
in  the  area  producing  good,  fair,  and  poor  crops,  in  order  to  estimate 


Bul.  435] 


AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION 


21 


how  much  of  the  land  in  the  projects  was  self-sustaining.  The  small 
amount  of  land  producing  good  crops  was  somewhat  disappointing. 

Table  4  shows  the  land  utilization  in  California  reclamation  and 
irrigation  districts.  Irrigated  land  used  for  grain  and  pasture  was 
classified  as  producing  poor  crops  because  the  returns  are  usually 
insufficient  to  pay  district  taxes  and  interest  on  the  investment. 

The  results  of  the  detailed  studies  on  the  347,822  acres  were  used 
in  obtaining  a  basis  of  making  more  general  estimates  of  the  933,605 
acres.    The  results  of  the  survey  are  given  in  table  5. 

TABLE  5 

Extent  of  Economic  Utilization  of  Land  in  Irrigation  and  Keclamation 
Districts  of  California 


Land  classification  according  to 
condition  of  crops 

Combined  irrigation 

and  reclamation 

districts 

Irrigation 
districts 

Reclamation 
districts 

In  irrigated  area:* 

Acres 

188,837 
130,885 
144,618 
464,340 

301,073 
168,192 
469,265 

933,605 

Per  cent 

40.6 
28.2 
31.2 
100  0 

Acres 

58,337 
49,335 
57,170 
164,842 

Per  cent 

35.4 
29.9 
34.7 
100  0 

Acres 

130,500 
81,550 
87,448 

299,498 

301,073 
168,192 
469,265 

768,763 

Per  cent 
43.6 

27  2 

29  2 

Total 

100  0 

In  unirrigated  area: 

Total 

164,842 

*  The  classification  includes  an  allowance  of  one  acre  of  fallow  land  for  each  acre  of  rice,  classified 
the  same  as  the  rice  crop  produced. 


Of  the  464,000  acres  of  irrigated  land  classified  in  table  5,  118,000 
acres  were  in  fruit  and  of  the  remaining  346,000  acres,  144,600  acres, 
or  42  per  cent,  were  poorly  farmed  and  only  partly  developed. 

Of  the  1,879,649  acres  of  irrigated  crops  accounted  for  in  table  4, 
practically  350,000  acres  were  fruit,  and  1,530,000  acres  were  other 
irrigated  crops.  Of  the  latter,  220,000  acres,  or  14%  per  cent,  were 
irrigated  grain  and  pasture. 

Assuming  all  this  fruit  acreage  is  fully  developed  and  applying 
the  results  of  this  survey  to  the  irrigation  and  reclamation  districts 
of  the  state,  the  poorly  farmed  area  would  be  42  per  cent  of  the 
1,530,906  acres  of  irrigated  general  crop  land,  or  640,000  acres.9 


9  This  seems  a  fair  estimate  of  the  condition  of  the  general  crop  land  of 
the  irrigation  and  reclamation  districts.  Sampling  has  been  done  carefully 
and  actual  observations  made  of  these  sample  areas.  The  condition  in  one 
of  these  sample  areas  that  is  better  than  the  average,  illustrates  a  condition 


22  UNIVERSITY    OP    CALIFORNIA EXPERIMENT    STATION 

There  are  more  than  3,000,000  acres  of  irrigated  land  outside  of 
these  districts,  much  of  which  is  highly  developed.  Much  of  the  land 
that  is  not  farmed  intensively  enough  to  be  self-sustaining  is  new 
land  that  will  increase  in  production  as  it  is  farmed.  Not  all  of  the 
land  planted  to  fruit  and  vines  has  been  properly  prepared  and  the 
trees  may  not  come  into  bearing.  Some  must  be  releveled  and 
replanted.  It  is  estimated  there  were  in  1924,  750,000  acres  of  irri- 
gated land  in  California  that  had  not  yet  been  prepared  for  irrigation, 
or  that  were  only  partly  prepared  and  must  be  improved  before 
profitable  farming  will  result.10 

If  we  accept  the  estimate  of  the  United  States  Division  of  Irri- 
gation Investigations  as  the  irrigated  area  in  1919  and  add  500,000 
acres  which  has  been  estimated  as  the  growth  during  the  five-year 
period  from  1919  to  1924,  the  total  irrigated  area  in  1924  would  have 
amounted  to  about  5,500,000.  Adding  to  this  1,200,000  acres  of 
irrigable  land  provided  with  construction,  the  total  was  then  6,700,000 
acres,  11  per  cent  of  which  was  not  farmed  intensively  enough  to  pay 
costs  of  farm  operation  and  irrigation  taxes,  and  18  per  cent  of  which 

little  realized  or  understood  by  the  general  public.  In  this  district  the  follow- 
ing findings  were  the  result  of  a  careful  survey  by  the  writers  based  upon 
classification  and  economic  studies  of  farmers'  financial  condition. 

"The  area  of  the  district  in  bad  condition  agriculturally  is  25.7  per  cent 
of  the  irrigable  area;  the  area  of  the  district  in  poor  condition  agriculturally 
constitutes  31.0  per  cent  of  the  irrigable  area;  the  area  of  the  district  in 
fair  condition  agriculturally  constitutes  31.6  per  cent  of  the  irrigable  area; 
the  area  which  is  in  good  condition  constitutes  11.7  per  cent  of  the  irrigable 
area.  From  deductions  made  by  comparing  financial  statements  from 
farmers  with  the  above  classification,  it  seems  probable  that  56  per  cent  of 
the  land  within  the  district  must  obtain  capital  from  outside  sources  to  meet 
even  present  obligations  for  irrigation  and  general  taxes,  and  in  view  of 
inevitably  increasing  taxes  the  question  of  how  long  money  can  be  obtained 
to  carry  these  charges  becomes  problematical.  On  44  per  cent  of  the  irri- 
gable area  the  farmers  are  increasing  their  inventories  from  year  to  year, 
and  although  a  strict  business  analysis  of  many  of  the  farming  enterprises 
would  show  an  inadequate  return  for  capital  and  labor,  the  economic  condi- 
tion is  sound  provided  drainage  conditions  do  not  become  worse  either  in 
the  matter  of  rising  water  table  or  alkali  accumulation. " 
!0  In  connection  with  this  statement  of  the  irrigation  situation  in  California, 
it  is  interesting  to  observe  conditions  in  other  parts  of  the  west.  The  United 
States  Keclamation  Service  classified  the  farms  of  all  their  projects  according 
to  appearance  of  the  crops  in  1925.  Their  figures  do  not  show  the  area,  but 
their  classification  in  terms  of  the  total  of  farms  are  as  follows: 

Per  cent 

6,208  farms  producing  excellent   crops   17.8 

14,427  farms  producing  good   crops   41.5 

10,705  farms  producing  fair  crops   30.8 

3,459  farms  producing  poor  crops  9.9 

These  farms  have  a  total  area  of  1,290,890  acres.  The  total  area  of  the 
projects  in  which  they  are  located  is  3,063,206  acres.  The  omission  of  idle 
lands  from  this  classification  must  be  considered  in  making  comparison  with 
the  California  classification.  Also,  the  basis  of  land  classification  was  probably 
different. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  23 

was  not  irrigated  at  all.  If  census  figures  be  used  (1919)  and  the 
half -million  acres  of  irrigated  land  developed  in  the  five  years  follow- 
ing be  added,  then  the  land  not  farmed  intensively  enough  to  pay 
costs  amounts  to  12.5  per  cent,  and  the  irrigable  land  in  projects  not 
irrigated  to  20  per  cent  of  the  total  irrigable  area. 


LAG  BETWEEN  IRRIGATION  CONSTRUCTION  AND 
PROFITABLE  FARMING 

The  large  amount  of  irrigable  land  not  using  the  facilities  pro- 
vided, and  the  amount  partially  developed,  emphasizes  the  delay 
between  irrigation  construction  and  the  development  of  profitable 
farms.  This  lag  is  an  expense  to  all  of  the  lands  developed,  for  the 
longer  the  delay,  the  larger  will  be  the  amount  of  irrigation  taxes  paid 
for  a  service  that  has  not  been  used  and  which  has  not  produced  any 
revenue. 

To  some  familiar  with  irrigation  conditions,  the  situation  may  not 
appear  so  important  because  the  irrigable  area  is  distributed  quite 
uniformly  throughout  the  projects  of  the  state.  However,  the  fact 
that  as  much  as  29  per  cent  of  the  lands  provided  with  irrigation 
facilities  is  not  yet  improved  enough  to  use  the  water  profitably,  is  of 
importance.  Assuming  no  more  construction,  it  would  take  from 
fifteen  to  twenty  years  to  take  up  this  lag  if  the  irrigated  area 
increases  no  faster  than  it  has  during  the  past  five  years.  It  has  been 
estimated  that  the  irrigated  area  of  the  state  increased  500,000  acres 
between  1919  and  1924.  At  this  rate  it  will  take  twelve  years  to  bring 
under  irrigation  the  1,200,000  acres  of  irrigable  land  provided  with 
construction  but  not  yet  utilized.  Further,  of  the  750,000  acres  of 
partly  improved  irrigated  land  300,000  are  grain  land  unleveled  and 
unchecked.  To  improve  these  300,000  acres  would  require  three  years 
more,  and  there  are  still  450,000  acres  of  partly  improved  land  requir- 
ing further  development.  Fifteen  years  of  taxes  added  to  the  farmer's 
costs  before  he  begins  improving  his  irrigated  farm  is  an  expense  that 
should  not  be  overlooked.  If  the  expense  caused  by  the  delay  in 
improving  irrigable  land  is  to  be  reduced,  a  closer  relationship  between 
land  settlement  and  irrigation  construction  will  be  necessary. 


24  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Part  II.  Possible  Causes  of  Maladjustments 

The  lag  of  agricultural  development  behind  irrigation  construction 
is  considered  by  some  to  be  a  normal  condition  and  one  that  cannot 
be  remedied.  If  it  is  normal,  then  its  importance  must  be  duly 
recognized,  and,  in  estimating  irrigation  project  costs,  adequate  allow- 
ance must  be  made  for  this  delay  in  settlement.  It  is  a  cost  to  land 
owners  much  larger  than  the  cost  of  construction  of  the  project  itself 
and  an  item  seldom  considered.  If  the  lag  of  agricultural  develop- 
ment is  something  that  can  be  remedied,  the  causes  must  be  known 
before  the  remedy  can  be  suggested. 

There  are  certain  fundamental  economic  causes  at  work  which  are 
favorable  to  irrigation  construction.  Another  set  of  economic  factors 
affects  the  rate  at  which  land  settlement  tends  to  take  place.  Aside 
from  these  general  economic  tendencies,  there  are  many  forces  urging 
irrigation  construction.  On  the  other  hand,  there  are  many  factors 
which  retard  agricultural  development.  The  degree  to  which  all  of 
these  elements  are  taken  into  consideration  by  officials,  engineers,  and 
promoters  in  determining  feasibility  of  projects  has  a  great  deal  to  do 
with  the  rate  at  which  projects  are  developed  once  they  are  created. 


THE   RELATION   OF   BUSINESS   CONDITIONS   TO 
CONSTRUCTION  AND  SETTLEMENT 

One  of  the  causes  of  the  tendency  for  irrigation  construction  to 
take  place  independently  and  at  a  different  rate  from  agricultural 
development  rests  upon  the  relation  of  industrial  conditions  and 
employment  to  construction  and  settlement  of  irrigation  projects.  The 
immediate  causes  of  construction  of  irrigation  projects  are  different 
from  those  impelling  farmers  to  move  to  the  land.  In  fact,  the}'  may, 
and  often  do,  work  in  the  opposite  direction.  Over  a  long  period  the 
motive  for  the  development  of  irrigation  projects  is  the  same  as  that 
which  causes  the  creation  of  farms.  This  motive  is  the  demand  for 
agricultural  commodities.  Over  shorter  periods,  which  may  extend 
over  a  considerable  number  of  years,  men  develop  farms  for  appar- 
ently different  reasons  from  those  which  bring  about  the  construction 
of  irrigation  projects. 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION 


25 


Relation  of  Land  Settlement  to  Prices  of  All  Commodities 

There  is  an  inverse  relation  between  rate  of  land  settlement  and  the 
changing*  general  price  level.  Although  farms  are  frequently  pur- 
chased and  resold,  fewer  people  actually  move  into  the  country  to 
establish  homes  in  prosperous  times  of  speculation  than  in  periods  of 
industrial  depression  when  wages  in  the  city  are  low  and  there  is 


Relation  of  Homestead  Entries  to  Prices  of  All  Commodities 


^Devfo- 


%Oev/a- 


Fig.  4 

much  unemployment.  When  there  is  no  work  to  be  had  in  the  city,  or 
when  wages  are  very  low,  people  move  to  the  country  where  the  cost 
of  living  is  less  and  where  they  expect  to  be  able  at  least  to  earn  a 
living  on  the  land.  The  relation  between  the  movement  of  people  to 
the  land  and  the  general  change  in  economic  conditions  is  shown  in 
figure  4,  in  which  the  variation  in  the  number  of  homestead  entries 
in  the  United  States  from  1880  to  1909  is  shown  in  comparison  with 
the  changes  in  the  general  level  of  all  commodity  prices  for  the  same 


26 


UNIVERSITY   OF    CALIFORNIA — EXPERIMENT   STATION 


The  Kelation  of  Land  Settlement  in  the  Turlock  Irrigation  District  to 

Price  Conditions 


ZOO 


150 


/oo 


so 


-so 


•/oo 


-150 


-zoo 


/90Z    03 


Fig.  5. — The  first  differences  in  the  actual  parcels  of  land,  1901  to  1914, 
inclusive,  were  obtained  by  subtracting  each  year  from  the  following.  To 
these  first  differences  the  trend  line  was  computed,  having  as  its  equation 
Y  =  361.3  +  44. IX.  The  deviations  from  these  figures  were  then  correlated  with 
first  differences  of  relative  prices,  or  the  "all  commodity  index."     Since  there 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  27 

period.  The  two  curves  show  an  inverse  relationship.  When  prices 
rose,  fewer  people  took  up  homesteads  than  when  prices  were  falling. 

A  similar  study  was  made  of  the  relation  between  price  conditions 
and  the  rate  of  settlement  in  the  Turlock  Irrigation  District.  The 
period  1901  to  1915  was  taken  as  that  was  the  period  during  which 
settlement  in  this  district  was  most  active,  and  because  the  years 
subsequent  to  1915  were  irregular  due  to  war  conditions.  The  general 
trend  of  the  rate  of  settlement  during  these  years  was  determined 
by  ordinary  statistical  methods,  and  the  deviations  from  year  to  year 
were  determined  from  this  trend.  For  the  same  period,  the  rate  of 
change  of  prices  from  year  to  year  was  determined  and  it  was  found 
that,  in  general,  when  the  rate  of  settlement  was  high,  prices  were 
declining,  and  when  the  rate  of  settlement  was  low,  prices  were 
increasing.  This  was  practically  the  same  result  as  that  found  in  the 
study  of  the  rate  at  which  homestead  entries  were  made  as  compared 
with  the  same  series  of  prices.  Figure  5  illustrates  the  tendency  which 
was  found  in  the  Turlock  Irrigation  District.  The  years  where 
digression  from  this  general  tendency  is  noted  may  be  explained  by 
conditions  existing  in  the  project  such  as  the  enlargement  of  a 
reservoir. 

Jerome,  in  a  study  of  migration  and  business  cycles,  discovered 
tendencies  with  respect  to  migration  and  employment  which  are  closely 
related  to  the  findings  presented  here.  He  finds  that  "Cyclical  move- 
ments in  emigration  are  inversely  correlated  with  those  of  immigration 
and  employment,  with  large  emigration  in  depression  periods  and 
relatively  small  emigration  in  boom  periods."11  From  our  studies  it 
is  evident  that  the  same  causes  which  send  large  numbers  out  of  the 
United  States  during  periods  of  unemployment  also  send  others  in 
search  of  employment  on  the  land. 


11  Jerome,  Harry.  Migration  and  business  cycles,  p.  121.  National  Bureau 
of  Economic  Kesearch,  Inc.,  New  York  City.     1926. 

was  not  a  very  marked  trend  in  the  first  differences  of  relative  prices,  deviations 
were  measured  from  a  mean.  Chart  No.  1  shows  the  increase  and  the  decrease 
of  the  two  variations  measured  as  deviations  from  the  normal,  a  trend  line 
in  the  case  of  parcels  of  land  (first  differences  for  years  1909  to  1914,  inclusive) 
and  the  mean  in  the  case  of  the  price  level. 

The  coefficient  of  correlation,  when  all  years  were  included,  was  ■ — 0.278. 
This  is  exceedingly  low  because  the  influence  of  the  off  years  1909,  1911,  and 
1914.  Excluding  these,  however,  the  resulting  coefficient  was  —0.7169.  The 
correlation  was  also  computed  for  the  first  7  years,  1901  to  1908,  for  which 
the  correlation  coefficient  was  — 0.913.  The  correlation  suggests  that  with  a 
given  percentage  increase  in  price  level  for  one  year  over  another  there  can 
be  expected  a  great  actual  decrease  in  the  rate  of  increase  in  the  number  of 
parcels  of  land  occupied. 


28  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


The  Relation  of  Rate  of  Irrigation  Construction  to 
Financial  Conditions 

It  has  been  stated  that  in  prosperous  times  a  large  amount  of  irri- 
gation construction  is  installed.  How  closely  the  construction  of  projects 
is  related  to  financial  conditions  may  be  illustrated  by  a  comparison  of 
interest  rates  and  rate  of  construction  of  irrigation  and  reclamation 
projects.  In  figure  6,  the  deviations  of  the  rate  of  irrigation  and 
reclamation  construction  from  its  normal  trend,  and  deviations  from 
their  mean  of  the  average  monthly  interest  rates  on  60-  to  90-day  paper 
in  New  York  City  are  shown.  The  average  monthly  interest  rates 
have  been  advanced  one  year.  It  may  be  seen  that  money  conditions 
invariably  affect  the  rate  of  irrigation  and  reclamation  development 
the  next  year. 

The  remarkable  coincidence  of  high  rates  of  irrigation  and 
reclamation  development  following,  without  variation,  a  high  interest 
rate  the  previous  year  for  a  twelve-year  period,  leaves  no  doubt  but 
that  irrigation  and  reclamation  development  (which  in  the  long  run  is 
brought  about  by  demand  for  agricultural  products)  over  shorter 
periods  follows  directly  the  condition  of  the  money  market.  When 
interest  rates  are  at  their  peak,  prices  and  business  activities  have 
usually  just  passed  their  peak.  In  general,  high  interest  and  high 
prices  tend  to  accompany  each  other,  prices  taking  the  lead  by  a  few 
months.12  Irrigation  and  reclamation  development,  therefore,  may  be 
expected  to  follow,  in  general,  the  upward  and  downward  swings  of 
prices  of  all  commodities.  In  prosperous  times,  many  more  projects 
are  built  than  in  times  of  depression.  Just  before  and  during  the  war, 
when  prices  were  advancing,  an  unusually  large  number  of  irrigation 
and  reclamation  projects  were  constructed  and  since  that  period  of 
prosperity  very  few  have  been  undertaken. 

High  farm  prices  cause  increased  farm  profits  because  prices  rise 
in  advance  of  the  items  of  production  cost.  These  increasing  agricul- 
tural profits  stimulate  irrigation  expansion  through  construction  of 
irrigation  projects  and  increase  the  irrigated  area  by  permitting  more 
extensive  farming  than  is  possible  in  times  of  lower  net  returns. 
During  the  war,  political  and  patriotic  motives  affected  the  situation, 
but  no  doubt  the  desire  for  profits  was  the  principal  cause  of  this 
expansion. 


12  Crum,  W.  L.     The  interpretation  of  the  index  of  general  business  condi- 
tions.    The  Eeview  of  Economic  Statistics  Supplement  7:217.     1925. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION 


29 


In  1909,  there  were  a  million  acres  of  irrigable  land  within  projects 
of  California  which  were  not  irrigated,  and  although  the  irrigated 
area  in  the  next  ten  years  increased  one  and  two-thirds  millions  acres, 


The  Relation  of  Annual  Acreage  Increase  in   California  Irrigation  and 
Eeclamation  Districts  to  Average  Monthly  Interest  Rates  on 
60-  to  90-Day  Paper 

Interest 
ffatefo 


/909    WO 


/4-     19/5      /6 
Fig.  6. 


19      /920 


there  were  in  1919,  720,000  acres  more  land  provided  with  irrigation 
facilities  but  not  yet  irrigated  than  in  1909.  This  piling  up  of  irri- 
gation construction  caused  by  high  prices  and  the  war  need  for  food, 


30  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

is  greater  than  will  occur  from  normal  cyclical  variations  in  business. 
Most  of  this  construction  must  be  paid  for  from  farm  earnings  in  times 
of  lower  prices.  It  will  be  seen  that  the  tendency  for  irrigation  con- 
struction to  accompany  high  prices  of  all  commodities  is  just  the 
opposite  from  the  tendency  described  above,  for  men  to  move  to  the 
land  during  business  depressions.  In  times  of  depression,  the  tendency 
is  for  the  lag  between  irrigation  construction  and  the  development  of 
profitable  farms  to  diminish  and  in  prosperous  times  for  this  lag  to 
increase  again.  It  is  obvious,  therefore,  that  these  tendencies  must  be 
taken  into  consideration  in  any  plan  designed  to  bring  irrigation  and 
agricultural  development  into  closer  accord  with  one  another. 


FACTORS   URGING   IRRIGATION   CONSTRUCTION 

There  are  many  forces  urging  irrigation  construction.  These 
forces  may  be  political  or  they  may  be  initiated  by  business  organi- 
zations. Speculation  is  an  important  cause  of  irrigation  expansion. 
Important  economic  changes  take  place  in  different  agricultural  com- 
modities which  compel  owners  to  change  their  type  of  agriculture. 
Dry  farming  tends  gradually  to  deplete  the  fertility  of  the  soil, 
necessitating  a  change  to  more  intensive  agriculture  under  irrigation. 

Political  Influences 

Political  influences  and  economic  tendencies  are  so  interrelated  that 
it  is  difficult  to  determine  exactly  where  one  stops  and  the  other  begins. 
Political  motives  have,  no  doubt,  in  many  instances,  been  influential 
in  starting  certain  developments  and  in  checking  others.  Political 
leaders  are  well  informed  of  local  and  economic  conditions,  but  they 
are  also  ambitious  for  the  development  and  growth  of  the  locality 
they  represent. 

Booster  Organizations 

Rural  towns  are  dependent  upon  agricultural  development  around 
them  for  their  business.  Cities  are  dependent  upon  rural  towns  for 
their  industrial  support.  Most  rural  towns  and  cities  maintain 
chambers  of  commerce,  service  clubs,  and  other  organizations  for  the 
express  purpose  of  boosting  expansion. 

Where  a  small  nucleus  of  irrigated  farms  exists,  there  is  usually  a 
tendency  towards  expansion,  and  new  construction  is  urged  in  order 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  31 

to  induce  outsiders  to  become  interested  in  the  community.  More 
people,  it  is  pointed  out,  will  increase  local  improvements,  provide 
better  roads,  and  increase  land  values.  To  the  local  business  man, 
each  new  settler  is  a  prospective  customer.  It  is  more  important  to 
maintain  the  farming  enterprises  of  those  already  established  in  the 
community  than  to  increase  business  by  ambitious  plans  of  project 
expansion. 

Decreased  Economy  of  Dry  Farming 

The  dry-grain  lands  of  the  interior  valley  are  each  year  becoming 
less  productive  for  that  one  type  of  agriculture.  This  situation  is 
aggravated  by  other  economic  causes  which  have  recently  tended  to 
make  grain  farming  unprofitable  over  the  entire  country.  As  the 
limit  of  profitable  cultivation  is  approached,  the  owners  are  compelled 
to  seek  an  irrigation  supply.  Since  most  of  the  water  rights  that  are 
acquired  are  appropriation  rights  which  are  based  upon  the  principle 
of  priority  of  use,  each  year  water  rights  are  more  difficult  to  obtain.13 
The  probability  therefore  is  that  the  longer  the  owners  of  these  grain 
lands  postpone  obtaining  a  water  supply,  the  greater  will  be  the 
difficulty  of  obtaining  one  and  the  larger  the  cost  of  water.  There  is 
a  tendency  to  organize,  therefore,  into  districts  large  enough  to  obtain 
an  economical  water  supply. 

Speculation 

Speculation  in  land  need  not  be  discussed  in  detail  for  its  evils  are 
probably  better  understood  than  many  of  the  other  factors  under 
consideration.  Speculation  is,  no  doubt,  one  of  the  very  important 
forces  urging  irrigation  construction.  A  large  part  of  the  speculator 's 
gain  comes  from  the  lack  of  knowledge  on  the  part  of  the  purchasing 
farmer  as  to  elements  of  cost  in  the  completely  developed  irrigated 
farm.  Speculators  themselves,  however,  frequently  suffer  because  all 
of  the  elements  of  cost  have  not  been  considered.  The  inflation  of 
land  prices  by  traders  in  land  has  done  much  to  cause  projects  to 
become  infeasible  even  though  the  original  situation  of  the  project 
was  favorable  to  its  development.  In  fact  the  prospects  of  many 
districts  have  been  ruined  by  speculation  in  land  and  the  resulting 
bad  effects. 


!3  The  interior  valley  is  irrigated  by  two  large  rivers,  the  Sacramento  and 
the  San  Joaquin.  Each  right  acquired  on  any  tributary  affects  those  of  the 
entire  stream.  This  makes  the  water  rights  more  complicated  than  if  numerous 
small  streams  served  the  same  area. 


32  university  of  california experiment  station 

Forces  Urging  Construction  Are  More  Active  During  Periods  of 
Prosperity  than  During  Depression 

It  has  been  shown  that  a  rapid  increase  in  reclamation  and  irri- 
gation-district organization  took  place  during  and  immediately  after 
the  war.  The  increase  in  construction  during  this  period  of  inflation 
emphasizes  the  fact  that  the  factors  urging  construction  are  more 
active  in  times  of  prosperity  than  in  times  of  depression.  When  prices 
are  high  and  profits  from  farming  are  larger,  these  factors  are  much 
stronger  than  when  prices  are  low.  High  profits  and  easy  financing 
are  very  important  in  their  effect  upon  construction  in  times  of  pros- 
perity. High  profits  stimulate  agricultural  expansion,  and  since  this 
is  possible  only  by  the  use  of  irrigation,  new  construction  is  urged  in 
all  parts  of  the  country.  Further,  it  is  much  easier  to  obtain  financial 
assistance  and  many  projects  that  could  not  market  their  bonds  or 
obtain  financial  aid  in  normal  times  are  able  to  finance  their  construc- 
tion in  times  of  prosperity. 


FACTORS  AFFECTING  RATE  OF  LAND  SETTLEMENT 

Factors  which  retard  agricultural  development  tend  to  widen  the 
gap  between  construction  and  settlement.  Total  costs  of  developed 
lands  exceed  expectations.  These  costs  are  little  known  and  under- 
stood by  prospective  farmers  and  promoters  of  irrigation  development. 
Many  of  the  most  important  elements  of  cost  are  not  included  in 
estimates  upon  the  basis  of  which  projects  are  created.  Lack  of  capital 
for  farm  purchase  and  development  retards  settlement.  There  has 
been  much  discussion  of  overproduction  recently  and  some  individuals 
vitally  interested  in  agriculture  have  gone  to  the  extreme  of  opposing 
even  the  expansion  of  agricultural  production  that  would  result  from 
the  completion  of  projects  already  begun.  Overproduction  is  difficult 
to  analyze  or  even  to  define.  The  inclusion  in  a  project  of  large 
amounts  of  land  of  low  quality  materially  retards  its  development. 
Failure  to  recognize  these  elements,  which  so  vitally  affect  the  success 
and  progress  of  agriculture  under  irrigation,  may  bring  into  existence 
projects  which  are  not  feasible  because  all  of  the  elements  of  cost  have 
not  been  considered,  or  because  they  may  be  ill-timed  with  respect  to 
conditions  favorable  to  their  construction  and  utilization.  Feasibility 
determinations,  therefore,  play  an  important  role  in  keeping  agricul- 
tural and  irrigation  development  in  a  favorable  relationship  with  one 
another. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  33 


Increasing  Size  of  Projects 

Teele14  has  prepared  curves  showing  the  rate  at  which  the  irrigated 
area  increases  in  projects  of  different  sizes.  Small  projects  are  rapidly 
brought  under  irrigation,  but  the  larger  ones  develop  slowly  and  it 
appears  that  many  of  them  are  never  completely  brought  under 
irrigation.  This  is  due  to  the  fact  that  the  larger  project  usually 
contains  more  poor  land.  Much  of  this  land  is  not  fit  for  irrigation, 
but  is  included  because  it  is  contiguous. 

It  is  known  generally  that  future  irrigation  development  will 
involve  large  projects,  units  of  one  large  coordinated  scheme  for 
developing  the  water  resources  of  the  state  so  as  best  to  serve  the 
agricultural,  municipal,  and  power  interests  depending  upon  our 
stream  flow.  These  large  projects  will  reduce  the  present  rate  of 
settlement. 

Increasing  Cost  of  Farm  Development 

The  cost  of  irrigation  projects  is  increasing.  The  larger  the  con- 
struction cost,  the  smaller  will  be  the  amount  that  can  be  profitably 
spent  for  the  improving  of  the  land  if  values  rise  no  higher  than  at 
present.  This  should  reduce  the  number  of  settlers  willing  to  under- 
take land  development. 

Increasing  Difficulty  of  Finding  Settlers 

In  spite  of  urging  diversification,  crop  specialization  is  character- 
istic of  California.  Such  specialization  is  requiring  continually  more 
skill,  business  ability,  and  capital  for  success  so  that  each  year  fewer 
farmers  can  be  found  with  the  requisites  for  successful  land  settle- 
ment. We  have  had  too  much  amateur  farming.  To  succeed,  one  must 
understand  agriculture. 

The  Best  Soils  Have  Been  Put  under  Irrigation 

The  most  fertile  soils  are  found  along  our  streams  where  overflow 
has  built  up  new  soils  containing  humus.  These  have  already  been  put 
under  irrigation.  The  areas  to  be  irrigated  are  farther  from  the 
streams  and  may  be  as  fertile  after  they  have  been  cropped  for  a 
number  of  years,  but  they  are  older  soils  containing  less  humus  and 
more  hardpan.  It  is  more  expensive  to  build  up  these  soils  than  to 
develop  fertile  lands. 


!*  Teele,  R.  P.     Land  reclamation  policies  in  the  United  States.     U.  S.  Dept. 
Agr.  Dept.  Bui.  1257:32.     1924. 


34  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Increasing  Value  of  Farm  Land 

Values  of  farm  lands  in  this  country  have  increased  steadily.  Many 
western  farmers  have  been  made  wealthy  by  the  increase  in  the  value 
of  their  land  alone,  aside  from  any  returns  from  farming.  This 
increase  in  land  value  has  stimulated  agricultural  development.  Land 
values  may  not  continue  to  advance,  for  they  have  already  reached 
the  level  of  similar  lands  in  densely  populated  countries  of  Europe. 
Further,  if  the  general  price  level  gradually  declines  to  the  pre-war 
level,  land  prices  must  also  decline.  This  will  affect  the  development 
of  new  areas. 


Elements  which  Enter  into  the  Cost  of  the  Irrigated  Farm 

If  the  total  cost  of  the  completely  developed  farm  does  not  exceed 
the  sale  value  of  the  farm  when  improved,  the  development  has  been 
economic  for  the  one  improving  the  land.  If  the  cost  of  land  and  its 
improvement  throughout  an  entire  project  is  less  than  the  market 
price  of  all  of  the  land  when  improved,  then  the  project  as  a  whole  is 
an  economic  success,  even  though  some  of  the  farmers  may  have  failed 
to  improve  their  land  at  a  profit.  The  cost  of  creating  a  farm  in  itself 
does  not  determine  its  value.  Value  is  based  upon  present  and 
potential  earning  power.  Costs  of  bringing  into  cultivation  new  lands 
may  have  some  effect  upon  land  prices  just  as  the  normal  prices  of 
commodities  are  affected  by  the  increasing  cost  of  new  supplies. 
Price  of  land  is  determined  by  popular  opinion  as  to  the  present  worth 
of  all  of  its  future  annual  incomes.  If  costs  of  developing  irrigated 
land  were  better  understood,  there  would  be  a  closer  relation  between 
the  value  of  irrigated  land  and  its  cost  when  improved.  Market 
prices  of  both  raw  and  irrigated  land  would  be  more  nearly  equal  to 
true  value.  In  other  words,  popular  opinion  as  to  value  would  be 
more  accurate. 

The  ultimate  total  cost  of  any  irrigated  farm  includes  the  price  of 
the  raw  unimproved  land;  the  cost  of  irrigation  construction;  taxes 
paid  before  the  land  is  irrigated;  the  cost  of  improving  the  land,  and 
interest  costs  on  all  of  these  items  during  the  period  of  development. 
In  California  the  price  of  the  raw  land  is  usually  that  of  land  pre- 
viously utilized  for  the  production  of  grain  or  for  pasture.  However, 
in  some  districts  much  clearing  of  timber  and  brush  is  required.  The 
cost  of  irrigation  includes  all  the  costs  of  construction,  and  sometimes 
also  drainage,  which  are  charged  to  the  land  either  through  direct 


Bul.  435]  AGRICULTURAL   DEVELOPMENT    AND   IRRIGATION  35 

assessment  or  by  issuing  bonds  which  are  a  lien  upon  the  property. 
Taxes  paid  before  the  land  is  irrigated  are  truly  a  cost  element  for 
they  cannot  be  charged  to  costs  of  producing  crops  before  crop  pro- 
duction takes  place.  These  taxes  include  irrigation  and  other  taxes. 
Operation  and  maintenance  costs  during  the  unproductive  period  of 
development  must  be  considered  a  capital  cost.  The  cost  of  land 
improvement  includes  clearing,  leveling,  checking,  construction  of 
farm  laterals,  and  the  building  of  farm  structures.  Interest  during 
the  unproductive  period,  whether  actually  paid  or  not,  is  a  cost  element 
in  the  improved  farm,  for  capital  lying  idle  during  development  could 
otherwise  be  invested  to  advantage. 

Price  of  Raw  Unimproved  Land. — The  price  of  raw  land,  though 
seldom  considered  in  planning  an  irrigation  project,  is  perhaps  the 
most  important  of  all  the  items  entering  into  the  cost  of  improved 
land.  The  community,  in  considering  the  construction  of  a  project, 
is  contemplating  an  investment  to  increase  the  productivity  of  its 
land.  The  construction  of  the  irrigation  system  is  usually  financed  by 
bonding,  but  the  leveling,  checking,  ditching,  and  supplying  of  the 
farm  buildings  must  be  provided  by  the  labor  and  capital  available  in 
the  community  and  by  that  which  can  be  brought  in  from  outside 
sources.  An  individual  with  his  own  labor  can  properly  farm  about 
one-eighth  as  much  irrigated  land  as  dry-farming  land.15  If  the  land- 
owner is  using  all  his  labor  profitably  in  dry-farming,  he  cannot  under- 
take the  preparation  of  the  land  for  irrigation  unless  he  can  obtain 
capital  to  hire  work  done.  The  available  capital  is  often  spent  in 
improving  the  land,  leaving  the  owner  unable  to  farm  all  of  his  land 
properly.  He  is  therefore  unable  to  utilize  the  investment  he  has  made 
in  improvements. 

Before  entering  into  a  construction  program,  it  is  essential  to 
know  from  a  canvass  of  the  community  how  much  capital  is  available 
there  for  development  and  how  much  land  this  will  improve.  The 
remaining  land  should  be  sold  at  once.  It  is  evident,  unless  it  is  a  very 
wealthy  community,  that  a  large  part  of  the  land  to  be  irrigated  must 
be  sold.  If  this  is  to  be  done  without  delay,  careful  consideration 
must  be  given  to  the  sale  price.  Most  farmers  refuse  to  consider  the 
prospective  price  of  their  unimproved  land,  believing  that  this  can 
be  decided  when  the  irrigation  system  is  built  and  sale  is  actually 
necessary.  It  appears  to  them  to  be  an  item  that  will  take  care  of 
itself.     As  a  matter  of  fact,  the  high  prices  asked  lead  to  a  delay  in 


15  This  applies  to  general   farming,  not  to  fruit  growing;   in  the  latter  the 
proportion  is  much  smaller. 


36  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

settlement,  and,  consequently,  to  increased  irrigation  taxes  for  the 
landowners.  This  increases  the  risk  of  project  failure,  discourages 
the  landowners,  and  keeps  away  prospective  settlers. 

Few  would  consider  constructing  a  project  if  the  expenditures  for 
improvement  were  to  equal  the  value  of  the  land.  Yet  land  is 
improved  under  such  conditions,  which  indicates  either  a  serious 
miscalculation  of  the  items  of  cost  or  an  inadequate  calculation.  The 
latter  case  is  probably  the  more  common.  If  estimates  of  the  cost  of 
the  improvements  are  available,  the  land  price  should  be  set  at  such 
a  figure  that  it  will  be  an  inducement  to  settlers.  The  profit  to  the 
landowner  should  result  from  the  increased  earning  power  of  the  land 
he  improves  himself.  The  attempt  to  take  a  profit  from  the  sale  of 
unimproved  land  has,  in  many  instances,  resulted  in  disaster. 

The  significance  of  bonded  debt  for  irrigation  or  reclamation  is  not 
generally  understood  by  farmers  and  is  often  overlooked  in  the  con* 
sideration  of  purchase  price.  In  the  east,  with  the  exception  of  a  few 
drainage  districts,  very  little  land  is  included  in  bonded  projects. 
There  the  purchaser  need  be  concerned  only  with  the  productivity  of 
the  soil  and  its  location.  In  the  west,  land  of  similar  quality  in  adjoin- 
ing projects  should  vary  greatly  in  price  simply  because  of  differences 
in  the  cost  of  the  project  construction.  That  settlers  do  not  carefully 
consider  the  indebtedness  of  districts  in  which  they  purchase  land  is 
evidenced  by  the  fact  that  in  some  localities  land  with  a  bonded  debt 
of  $100  or  $200  an  acre  sells  for  the  same  price  as  land  of  similar 
quality  with  the  same  irrigation  facilities  and  little  or  no  debt. 

The  prospective  irrigation  farmer  seldom  realizes  that  a  bonded 
debt  is  an  actual  lien  upon  his  land.  If  he  has  a  mortgage  of  $10,000 
upon  his  property,  it  is  a  matter  of  great  concern  to  him,  and  he 
does  his  utmost  to  get  rid  of  the  debt.  But  if  the  land  is  mortgaged 
by  the  district  for  this  amount,  frequently  the  farmer  scarcely  con- 
siders it.  If  he  fails  to  take  this  bonded  debt  into  account  in  valuing 
his  land,  however,  he  may  pay  too  much  for  it.  In  some  instances 
there  is  actually  an  overlapping  of  districts  which  may  give  rise  to  a 
number  of  different  bonded  debts,  each  a  lien  upon  the  land  included 
within  its  boundaries,  as  shown  in  a  later  section  of  the  report. 

Variability  of  Farm-Land  Prices. — Prices  of  land  in  newly  irrigated 
areas  vary  between  wide  extremes.  Similar  lands  in  the  same  projects 
have  sold  at  from  $75  to  $200  an  acre  without  an  apparent  reason  for  the 
difference.30  Not  only  are  there  wide  differences  in  land  prices  in  given 
projects,  but  there  are  just  as  great  inconsistencies  between  prices  of 


16  Adams,  F.     Are  we  developing  our  irrigated  areas  too  rapidly?     Trans- 
actions of  the  Commonwealth  Club  of  California  20:386-387.     1925. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  37 

land  in  different  projects  having  similar  bonded  debts.  An  owner  of 
a  certain  small  district  sold  his  land,  levelled,  checked,  and  planted, 
and  having  a  bonded  debt  of  $50  an  acre,  for  $550  an  acre.  Across 
the  river,  similar  land  with  a  bonded  debt  of  $100  an  acre  sold  for 
$250  an  acre.  At  that  time,  transportation  facilities  were  a  little  better 
for  the  high-priced  land,  but  about  two  years  later  they  were  prac- 
tically the  same.  Large  companies,  however,  selling  unimproved  land 
(or  grain  land)  at  prices  beyond  its  productive  value,  are  unable  to 
dispose  of  all  their  holdings  before  the  settlers  realize  they  have  been 
overcharged  and  land  sales  cease  or  are  greatly  retarded  until  prices 
are  lowered. 

The  price  of  raw  land  in  unimproved  districts  should  not  be  con- 
fused with  that  of  raw  land  in  highly  developed  areas  where  social, 
religious,  and  educational  advantages  give  the  land  a  high  residential 
value  quite  apart  from  its  earning  power.  It  must  be  remembered 
that  land  in  new  districts  has  no  residential  value  until  farm  roads, 
highways,  railroads,  schools,  churches,  etc.,  have  been  provided  and 
rural  communities  created.  These  improvements  and  part  of  the  pur- 
chase price  of  the  farm  must  be  paid  for  out  of  the  earnings  of  the 
land.  If  the  land  is  overpriced,  the  earnings  may  not  be  adequate  to 
provide  the  local  improvements  needed  by  the  community.  Over- 
valued raw  land  makes  profitable  development  of  irrigated  farms 
especially  difficult  for  the  man  of  limited  capital  who  must  depend 
upon  the  earning  power  of  the  land  to  pay  for  the  farm.  An  important 
means  of  stimulating  agricultural  development  and  land  settlement 
is  to  establish  fair  and  uniform  prices  for  lands  of  similar  quality. 
The  determination  of  a  proper  price  must  involve  a  consideration  of 
the  per-acre  cost  of  irrigation  construction,  the  cost  of  improving  the 
land,  and  an  allowance  for  taxes  and  interest  paid  for  irrigation 
service  before  it  can  be  used. 

If  settlers  are  charged  too  much  for  the  land,  they  are  beaten  before 
they  begin.  Failures  are  sure  to  result,  each  of  which  is  an  adverse 
advertisement  for  the  project.  Project  settlers  usually  have  very 
little  capital  and  are  unfamiliar  with  local  agricultural  problems.  It 
is  difficult  for  them  to  succeed  even  where  the  cost  of  the  land  and 
water  are  favorable.  Of  the  elements  entering  into  the  cost  of 
improved  agricultural  land  under  irrigation,  the  original  price  of  the 
land  is  usually  the  largest  single  item  and  one  that  varies  greatly. 
There  are  differences  in  the  cost  of  improving  the  land,  depending 
upon  many  factors,  but  the  range  of  the  difference  is  not  usually  so 
great  as  are  the  differences  in  the  purchase  price  of  the  unimproved 
land. 


38  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

The  problem  of  the  landowner  in  the  newly  formed  irrigation 
district  and  the  problem  of  the  man  contemplating  the  purchase  of 
either  improved  or  unimproved  irrigated  land  in  a  project  that  is 
under  way  are  similar,  the  only  difference  being  that  in  the  first  case 
the  landowner  has  to  estimate  practically  all  the  elements  of  cost, 
while  in  the  second  case,  some  of  the  costs  are  actually  known.  The 
value  of  land  in  any  project  depends  partly  upon  water  rights,  water 
supply,  quality  of  the  construction,  bonded  debt,  probable  future 
expenditures  for  construction,  annual  operation  and  maintenance 
costs,  etc.  These  items  are  generally  disregarded  by  prospective  land 
purchasers. 

Farmers  in  a  proposed  irrigation  project  should  consider  all  of 
the  elements  of  cost  involved  in  changing  their  grain  land  into  irri- 
gated farms,  so  that  from  these  data  they  can  place  a  reasonable  price 
upon  the  unimproved  land  they  must  sell.  Those  seeking  land  in  a 
constructed  project  not  yet  completed  must  seek  the  same  data,  and 
in  studying  the  local  project  all  bonded  debts  and  liens  against  the 
lands  must  be  considered  as  a  mortgage  indebtedness  to  be  paid  from 
the  farm  earnings. 

Cost  of  Irrigation  Construction. — Of  the  four  main  divisions  of 
cost  that  enter  into  the  cost  of  the  developed  farm,  the  cost  of  the 
irrigation  works  has  been  in  the  past  the  smallest  item.  In  the  early 
days  when  water  was  easily  obtainable,  the  cost  of  irrigation  con- 
struction was  a  small  item,  but  the  cost  of  irrigation  works  has  been 
increasing  and  will  continue  to  increase,  forming  a  continually  greater 
proportion  of  the  total  cost  of  the  developed  farm. 

In  the  past,  many  project  failures  were  due  to  poor  engineering. 
Fundamental  data  upon  which  to  base  estimates  were  then  lacking. 
There  were  few  hydrographic  records  and  no  standard  designs  or 
precedents  to  follow.  Today,  there  are  plenty  of  records  of  precipi- 
tation and  run-off,  and  because  of  the  excellent  engineering  designs 
of  the  past,  there  are  plenty  of  guides  for  construction  engineers  to 
follow.     Project  failures  due  to  poor  engineering  now  rarely  occur. 

Estimates  of  costs  of  construction  have,  in  most  instances,  differed 
greatly  from  the  ultimate  costs,  possibly  because  of  the  desire  of 
engineers  to  keep  estimates  low  by  recommending  cheap  construction 
that  required  a  change  of  plans  after  the  project  was  begun,  or  because 
unit  cost  data  for  construction  were  not  as  plentiful  as  they  are  today. 
In  some  instances  unforeseen  changes  in  the  cost  of  labor  and  building 
materials   were   responsible. 

Construction  costs  do  not  stop  when  operation  begins.  After  the 
operation  of  the  project  is  begun  and  the  initial  construction  finished, 


BUL.  435]  AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION  39 

the  project  is  usually  considered  completed,  but  this  is  seldom  the  case. 
Construction  programs  for  gravity  systems  differ  from  those  of  storage 
projects.  Combined  gravity  and  storage  projects  and  pumping  pro- 
jects also  have  their  construction  costs  distributed  in  a  way  peculiar 
to  these  types  of  irrigation  systems.  Different  types  of  distribution 
sj^stems  also  materially  affect  the  manner  in  which  construction  costs 
are  distributed  through  the  years  of  development.  Where  most  of  the 
water  is  obtained  by  gravity,  a  comparatively  small  proportion  of  the 
construction  need  be  completed  at  the  outset.  The  diversion  dam  is 
built  and  the  main  canal  constructed  to  a  capacity  less  than  will 
ultimately  be  required  and  laterals  are  extended  into  those  areas 
which  are  ready  to  use  the  water.  It  has  generally  been  the  practice 
to  install  temporary  structures  and  to  replace  these  with  concrete 
when  the  district  was  better  developed.  As  the  irrigated  area  has 
increased,  more  laterals  were  built,  the  capacity  of  the  main  canal 
was  gradually  enlarged,  and  better  structures  were  provided.  The 
construction  program  has  usually  followed  closely  the  development  of 
agriculture  within  the  area. 

If  the  project  has  a  direct  supply  for  only  part  of  the  area,  and 
storage  must  be  provided  for  the  balance,  there  will  be  two  periods  in 
the  project  history  when  a  large  amount  of  construction  is  carried  on; 
one,  when  the  project  is  begun,  and  the  other  when  the  storage  reser- 
voir is  constructed.  But  even  then  the  construction  may  be  extended 
over  thirty  or  forty  years.  Figure  7  shows  how  the  expenditure  of 
capital  has  been'  distributed  by  four  districts  that  have  provided 
storage.  Districts  A  and  B  were  begun  in  1888  and  records  of  early 
expenditure  were  not  obtained.  All  four  had  heavy  expenditures  for 
construction  when  the  projects  were  begun,  and  again  when  storage 
was  provided.  The  amount  of  irrigated  land  each  year  is  shown  with 
the  percentage  of  the  construction  then  installed.  In  unsual  cases 
where  the  value  of  the  land  and  water  is  high,  the  cultivation  inten- 
sive, and  the  water  supply  entirely  from  storage,  it  may  be  necessary 
to  complete  the  construction  at  once.    Such  projects  are  usually  small. 

Recently  several  irrigation  districts  which  obtain  most  of  their 
water  from  storage  have  been  formed  in  the  foothill  fruit  area  of  the 
interior  valley.  This  storage  will  be  provided  in  units  as  the  develop- 
ment of  land  requires.  The  distribution  system  for  these  projects 
includes  concrete-lined  canals  and  pipe-line  laterals.  Their  problem 
is  to  avoid  the  construction  of  an  elaborate  distribution  system  for 
widely  scattered  farms.  The  difficulty  of  unit  development  is  that 
frequently  scattered  and  numerous  ownerships  in  irrigation  districts 
do  not  permit  of  settling  one  unit  of  the  project  at  a  time. 


40 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


The  amount  of  the  distribution  system  constructed  by  irrigation 
districts  varies.  In  the  Glenn-Colusa  Irrigation  District,  the  district 
constructs  only  the  main  canal  and  all  users  must  provide  their  own 
laterals,  sublaterals,  and  farm  turn-outs;  in  the  Modesto  and  Turlock 


Percentage  of  Ultimate  Investment  Made  Each  Year  and  Percentage  of 

Ultimate  Irrigable  Area  Irrigated  Each  Year  in  Four  California 

Irrigation  Districts  1900-1925,  Inclusive 


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Fig.  7. — Ultimate  investment  is  an  estimate  of  the  total  cost  of  the  project 
based  upon  expenditures  already  made,  expenditures  the  districts  are  planning 
to  make,  and  estimates  of  future  construction  that  will  probably  become  neces- 
sary. The  sum  of  these  is  taken  as  100  per  cent  in  constructing  these  charts. 
The  ultimate  irrigable  area  is  the  total  area  which  these  districts  will  probably 
irrigate  in  the  future.  This  is  taken  as  100  per  cent  and  the  area  irrigated  in 
any  year  is  a  percentage  of  this  total. 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  41 

districts  the  main  laterals  are  built,  while  in  the  South  San  Joaquin, 
the  district  constructs  a  farm  lateral  to  every  forty-acre  tract.  In 
most  cases,  the  district  builds  the  entire  distribution  system  and 
delivers  water  either  to  each  landowner  at  the  high  point  of  his  land, 
or  to  the  high  point  of  every  40-  or  160-aere  tract. 

Through  poor  construction  and  improper  maintenance,  it  may  be 
necessary  to  replace  a  large  part  of  the  system.  If  wooden  structures 
have  been  used,  these  must  be  rebuilt  about  every  ten  years.  To  reduce 
the  annual  maintenance  costs  and  to  give  more  safety  in  operation, 
a  concrete  structure  usually  replaces  the  wooden  ones  at  a  large 
increase  in  first  cost. 

TABLE  6 

Percentage  of  Ultimate  Construction  Completed  by  Irrigation 
Districts  in  1924 


Number  of  districts 

Construction  completed 

Per  cent 

0 

Less  than  20 

3 

20  to  30 

3 

30  to  40 

4 

40  to  50 

2 

50  to  60 

6 

60  to  70 

2 

70  to  80 

15 

80  to  90 

27 

90  to  100 

62 

Nearly  every  irrigation  system,  except  in  fruit  areas  where  the  use 
of  water  is  very  small,  must  anticipate  the  costs  incident  to  construc- 
tion of  a  drainage  system.  Drainage  troubles  can  be  relieved  in  some 
instances  by  lining  the  canals,  but  generally  the  excess  water  must 
be  carried  away,  either  by  means  of  ditches  or  by  pumping  out  of  the 
ground.  As  the  limit  of  the  available  water  supply  is  approached, 
concrete  lining  becomes  more  necessary,  both  to  improve  drainage 
conditions  and  to  conserve  the  water. 

Projects  have  been  constructed  which  appeared  to  have  good  water 
rights,  but  when  the  earlier  rights  along  the  streams  had  perfected 
their  filings  and  made  use  of  the  water,  the  later  projects  found  them- 
selves to  have  rights  that  obtain  water  only  when  the  rivers  were  high. 
This  made  the  purchase  of  additional  water  rights  or  the  construction 
of  storage  necessary. 

From  the  foregoing,  it  is  evident  that  the  initial  construction  may 
involve  anywhere  from  25  to  100  per  cent  of  the  total.  From  a  study 
of  the  irrigation  districts  of  the  state  to  determine  what  proportion  of 
their  construction  is  now  installed,  the  results  given  in  table  6  were 
obtained. 


42  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

Many  of  these  projects  are  old,  so  that  the  results  do  not  represent 
the  amount  of  construction  required  when  the  project  was  first  under- 
taken. It  is  estimated  by  the  writers  after  careful  study  that  the 
construction  now  installed  by  all  the  districts  is  70  per  cent  of  that 
which  will  ultimately  be  required.  The  original  estimate  of  the  con- 
struction cost  of  a  project  or  the  bonded  debt  of  existing  projects  may 
represent  only  a  small  proportion  of  the  ultimate  cost  of  the  irrigation 
works. 

Because  of  the  flood  menace  in  parts  of  California,  reclamation, 
levee,  and  flood-control  projects  are  organized  in  the  overflow  areas.  It 
is  not  uncommon  for  irrigation  and  reclamation  districts  or  flood-con- 
trol districts  to  overlap.  In  fact,  in  a  few  instances  the  land  is  included 
in  three  different  districts  and  in  one  locality  the  same  land  forms 
part  of  four  different  districts,  all  of  which  are  bonded  and  have 
operation  and  maintenance  charges.  It  is  often  difficult  to  get  exact 
information  on  the  status  of  the  district  organizations  because  their 
affairs  are  semi-private  and  are  in  themselves  complicated. 

When  lands  are  irrigated,  it  becomes  necessary  to  protect  them 
from  overflow.  If  it  is  necessary  to  build  auxiliary  projects  to  supple- 
ment the  irrigation  works,  it  is  essential  to  know  their  estimated  cost 
to  arrive  at  the  ultimate  per-acre  cost  of  the  works. 

A  recent  development  in  irrigation  construction  is  the  production 
of  electric  power  in  connection  with  storage.  In  some  instances  the 
revenue  from  power  alone  will  pay  for  the  cost  of  both  the  storage 
and  the  electrical  installation,  and  in  all  instances  it  will  pay  for  the 
power  and  a  part  of  the  cost  of  storage. 

Figure  8  shows  the  effect  of  power  development  in  connection  with 
storage  upon  the  debt  of  five  large  irrigation  districts  that  are  develop- 
ing power  with  their  storage.  Column  1  in  each  instance  shows  the 
debt  per  acre  before  power  and  storage  were  constructed;  column  2 
shows  the  debt  with  power  and  storage  added ;  column  3  shows  what 
the  debt  would  have  been  had  power  been  omitted  and  only  storage 
provided;  and  column  4  shows  the  debt  that  must  be  paid  by  the 
irrigated  lands.  That  is,  the  fourth  column  shows  the  difference 
between  the  total  bonded  debt  and  the  amount  upon  which  power 
revenue  will  pay  the  interest  and  amortized  principal.  The  difference 
between  columns  3  and  4  is  the  amount  of  the  storage  cost  that  will 
be  paid  by  the  power.  Where  columns  1  and  4  are  equal  all  of  the 
power  and  storage  cost  will  be  paid  by  revenue  from  power.  These 
columns  show  the  debt  per  acre  of  agricultural  land  of  high  value,  and 
the  portion  in  solid  black  shows  the  debt  for  land  of  the  average 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


43 


assessed  value.  The  effect  of  power  installation  upon  annual  irrigation 
taxes  will  be  discussed  with  other  district  assessments  in  a  later  section. 
The  first  estimate  of  cost,  though  often  for  only  a  fraction  of  the 
ultimate  cost  of  construction  needed,  has  been  the  chief  factor  in 
determining  the  feasibility  of  irrigation  projects.  Knowledge  of  the 
ultimate  cost  of  the  project  construction  is  more  essential  than  that 
of  a  portion  of  the  cost.     The  total  per-acre  cost  of  the  irrigation 


Effect  of  Power  Development  in  Connection  with  Storage  on  Debts  in  Five 

Irrigation  Districts 


Deb+s  as  or"  &26 
1.  Preserrf   Deb-r    wi-rhour  Sforaye     and   Power. 
Z.  Presen-r  Outsl-onding    Debt   (Irrigation    and  Power.) 

3.  Present  Debt  ff  Power  Feotares   Were  Omitted. 

4.  Present-  Agricu/tt/ro/  ("Irrigation  )  Debt. 


I    )  Debt  Per  Acre,  High  Va/ued  Lands. 
■  Deb-r  Per  Acre,  Ave.-Voiued  Lands. 


system  when  completed  will  determine  whether  or  not  the  development 
of  irrigated  lands  will  be  profitable  for  the  owners  of  unimproved  land. 
Estimates  of  cost,  if  prepared  for  an  investment  covering  a  long 
period  of  time,  must  be  associated  with  probable  future  economic 
changes  that  will  affect  prices  in  general.  Figure  9  shows  the  changes 
in  the  general  price  level  from  1800  to  1925.  In  addition  to  short- 
period  changes,  there  are  the  longer  trends  in  price  change,  such  as 
the  downward  trend  from  1820  to  1835,  and  the  one  following  the 
Civil  War  which  lasted  from  1865  to  1920.  Since  1914,  prices  of  all 
commodities  throughout  the  world  have  undergone  violent  changes, 
largely  due  to  the  World  War.  Similar  general  price  changes  occurred 
during  the  Civil  War  and  the  war  of  1812.  The  peak  of  high  prices  in 
1865,  during  the  Civil  War,  was  followed  by  a  rapid  decline  until  1870 


44 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


and  a  gradual  lowering  of  prices  from  1870  to  1896.  From  1896  until 
1900  prices  rose  rather  sharply,  and  more  gradually  from  1900  to 
1914,  the  beginning  of  the  World  War.  From  the  end  of  1915  until 
the  middle  of  1918,  they  rose  rapidly.  From  then  until  the  armistice 
the  advance  was  more  moderate.  After  the  armistice,  business  slowed 
down  in  anticipation  of  a  drop.  After  a  slight  depression,  however, 
during  the  early  part  of  1919,  a  great  inflation  of  prices  took  place 
which  reached  a  maximum  in  the  spring  of  1920,  when  a  precipitous 
drop  occurred  in  the  prices  of  all  commodities.    In  the  preparation  of 

Index  of  Wholesale  Prices  in  the  United  States,  1791-1925 


Fig.  9.— Sources  of  data:  Years  1791-1922:  Warren,  G.  F.  Prices  of  farm 
products  in  New  York.  Cornell  University  Bui.  416:4.  1923.  Years  1923- 
1925:  Warren,  G.  F.  Business  conditions:  pre-war  =100.  Farm  economics 
41:581.     1927. 

engineering  estimates  for  contemplated  projects  it  is  essential  to  take 
into  consideration  these  long-time  trends  in  prices  and  allow  factors 
of  safety  large  enough  to  cover  the  fluctuations  that  cannot  be 
determined. 

A  large  part  of  the  irrigation  and  reclamation  construction  is 
installed  during  prosperous  times  when  prices  are  high  and  interest 
rates  on  borrowed  capital  are  large,  and  when  farmers,  because  of 
their  prosperity,  desire  the  construction  of  a  much  better  project  than 
they  would  build  in  normal  times. 

Figure  10  shows  the  change  in  wholesale  prices  of  building 
materials,  of  labor,  and  of  the  wholesale  prices  of  ' '  all  commodities. ' ' 
Since  labor  and  building  materials  are  the  two  largest  items  in  the  cost 
of  irrigation  and  reclamation  construction,  their  combined  fluctuations 
roughly  represent  the  fluctuations  in  cost  of  construction.    Prices  of 


BuL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION 


45 


Index  Number  of  Union  Wages  and  of  Prices  of  Building  Materials  Base 

Period  1910-1914  =  100 


Z60 

zeo 

Z40 

zzo 

zoo 
teo 

160 
14-0 

/zo 
/oo 

80 
GO 
40 
ZO 


Index  -for 
Buildtng  Ma+erials 


Wholesale   Pr/ce  Index 
(Warren)  Av.  /9/0-/4  =/00 


'Index  Numbers   o-f  Unton 


Wage   Ra-res  -for-  A//  Trades 
/n  1-he  U.S. 


I90Z    04     0<S      OS 


to 


IZ 


14 


t(o 


18      ZO      ZZ       24 


Fig.  10. — Wholesale  price  index  of  all  commodities — Aver.  1910-1914  =  100. 
Warren,  G.  F.  Business  conditions: — pre-war  =100.  Farm  economics  41:581. 
1927. 

Index  of  building  materials  from:  United  States  Department  of  Commerce 
Bureau  of  Foreign  and  Domestic  Commerce.  Prices.  Statistical  Abstract  of 
the  United  States  1924:300.  1925.  (Converted  to  1910-1914  base  by  dividing 
average  of  1910-1924  relatives  into  given  relatives.) 

Index  numbers  of  union  wage  rates  for  all  trades  in  the  United  States  from: 
Anonymous.  Wages  and  hours  of  labor.  Monthly  Labor  Review  19  (6)  :43. 
1924.     (Converted  to  1910-1914  base.) 


46  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

building  materials  and  of  all  commodities  began  to  advance  in  1915, 
reached  their  highest  point  in  the  spring  of  1920,  and  fell  preci- 
pitously in  1920  and  1921.  Building  materials  had  advanced  in  price 
more  rapidly  and  in  1920  had  reached  a  level  approximately  17  per 
cent  higher  than  the  all-commodity  index,  but  in  the  decline  of  1920 
and  1921,  returned  to  practically  the  same  level.  Wages  began  to 
advance  in  1917,  nearly  two  years  later,  and  have  continued  to  rise 
until  1924.  Wages  are  slow  to  advance,  and  although  they  have  never 
reached  the  high  level  of  general  commodity  prices,  or  of  the  prices 
of  building  materials,  they  have  continued  to  rise  after  prices  of  other 
products  have  fallen,  and  once  union  wages  have  advanced  they 
decline  slowly.  Any  construction  under  way  between  1915  and  1921 
would  exceed  the  estimate  of  cost,  but  if  begun  in  1915  the  cost  might 
easily  be  100  per  cent  greater  than  the  original  estimate. 

Numerous  examples  might  be  given  of  the  effect  of  changing  prices 
upon  estimates  of  construction  costs.  One  district  which  was  organ- 
ized in  1914  received  from  its  engineer  an  estimate  of  $295,000  for 
the  cost  of  constructing  the  project.  The  plans  were  modified  some- 
what and  the  point  of  diversion  changed,  but  alterations  did  not 
greatly  affect  the  cost.  Construction  continued  until  1919.  The  final 
cost  was  $525,000,  and  exceeded  the  estimate  by  78  per  cent,  princi- 
pally because  of  advancing  prices  of  labor  and  materials.  The  Flood 
Control  Project  of  the  Sacramento  River  was  estimated  in  1911  to  cost 
$33,400,000  when  completed.  Approximately  $34,000,000  have  now 
been  spent  and  it  is  estimated  that  $17,000,000  more  will  be  required 
to  complete  the  project, 

Engineers  are  often  criticized  because  construction  costs  exceed 
their  estimates,  when,  in  reality,  the  difference  in  cost  may  be  due  not 
to  mistaken  estimation  in  the  quantity  of  materials  and  labor  required, 
but  to  change  in  their  price  per  unit.  In  prosperous  times,  farmers 
are  quite  ready  to  spend  their  money  for  an  elaborate  project  and 
expenditures  are  made  which  are  not  absolutely  necessary.  The  result 
is  often  attributed  to  the  engineer.  The  fact  is  that  many  projects 
built  under  such  conditions  are  much  better  and  more  expensive  than 
was  originally  planned  or  necessary.  Projects  constructed  during 
periods  of  prosperity  usually  include  large  areas  of  land  which  may 
return  a  profit  when  prices  are  high  but  which,  in  normal  times, 
cannot  be  profitably  farmed.  The  proportion  of  construction  costs 
that  these  lands  were  expected  to  bear  then  falls  upon  the  better  lands. 

When  construction  costs  are  high,  interest  rates  on  borrowed  money 
are  also  high.    Farmers,  in  times  of  advancing  prices,  pay  6  per  cent 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  47 

for  money  which  they  could  obtain  at  5  per  cent  in  normal  times,  and, 
in  addition,  must  often  sell  their  bonds  at  a  discount.  A  bond  issue 
placed  in  times  of  high  prices  thus  involves  20  per  cent  more  for 
interest  than  if  placed  in  normal  times.  Viewed  a  little  differently, 
the  farmer  could  install  16%  per  cent  more  construction  with  the  same 
annual  interest  cost  in  times  of  normal  demand  than  in  times  of  high 
prices.  The  probability  is  that  this  extra  16%  per  cent  might  even 
reduce  the  annual  costs  because  of  reduced  operation  and  maintenance 
expense.  The  law  permits  refunding  bond  issues  but  refinancing  is 
expensive,  and,  since  districts  are  expanding  their  projects  every  few 
years,  more  bonds  are  issued  in  place  of  refinancing  the  issues  bearing 
high  interest  rates. 

Not  only  must  the  cost  of  all  of  the  irrigation  work  be  known,  but 
it  is  necessary  to  have  an  idea  of  the  cost  of  operating  and  maintaining 
the  irrigation  s}rstem  after  it  is  constructed.  Some  projects  that  have 
a  low  cost  for  construction  have  high  operation  and  maintenance  costs. 
This  is  particularly  true  of  pumping  projects.  Projects  having 
expensive  storage,  concrete-lined  canals,  and  permanent  structures, 
may  have  a  large  first  cost  and  a  small  cost  of  operation.  The  total 
annual  cost  to  the  farmer  for  irrigation  service  is  made  up  of  three 
items:  operation,  maintenance  (which  includes  depreciation),  and 
interest  on  the  cost  of  construction. 

Irrigation  projects  maintain  their  systems  annually,  hence  sinking 
funds  are  not  usually  necessary  for  replacements  except  where  large 
pumping  plants  are  used.  Annual  assessments  for  operation  and 
maintenance  include  depreciation.  The  cost  of  irrigation  service  of 
projects  may  be  compared  by  determining  the  average  annual  expendi- 
ture for  operation,  maintenance,  and  depreciation,  and  adding  to  this 
interest  on  the  total  cost  of  the  construction,  or  by  comparing  the 
capitalized  cost  of  the  service.  By  capitalized  cost  of  service  is  meant 
the  cost  of  the  construction  plus  an  amount,  which,  at  interest,  will 
produce  enough  revenue  to  operate  the  system,  maintain  it,  and  pro- 
vide for  replacements  when  needed.  For  pumping  projects,  the  cost 
of  the  system  is  much  less  than  the  annuity  which  will  operate  and 
maintain  it. 

The  first  irrigation  systems  cost  very  little,  hence  they  were  soon 
paid  for,  but  as  larger  and  more  expensive  systems  were  built,  more 
capital  was  borrowed,  and  more  time  was  required  to  repay  the  cost. 
Today,  many  of  the  large  projects  have  a  bonded  debt  nearly  equal 
to  the  original  cost  of  their  construction.  The  first  projects  built  were 
not  only  cheap  but  they  were  constructed  where  lands  were  free  from 


48  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

overflow  and  no  auxiliary  projects  for  flood  protection  and  drainage 
were  needed.  After  the  construction  cost  is  paid,  the  annual  costs  for 
irrigation  include  only  operation,  maintenance,  and  depreciation.  The 
irrigation  system  then  becomes  a  part  of  the  land  just  as  much  as  the 
fertility  that  has  been  stored  in  the  soil  by  farming,  but  until  this 
time,  the  debt  for  the  construction  should  be  deducted  from  the  value 
of  the  land  in  determining  its  sale  price. 

Information  as  to  the  amount  of  the  annual  assessment  per  acre  in 
the  irrigation  districts  may  be  obtained  from  the  district  offices.  These 
assessments  include  interest  on  the  bonded  debt,  usually  a  principal 
payment  on  the  indebtedness,  and  the  annual  cost  of  operation  and 
maintenance  of  the  canal.  Some  districts  that  do  not  retire  bonds 
collect  money  in  their  annual  assessments  for  canal  improvements  and 
new  construction.  In  comparing  assessments,  payments  of  principal 
and  funds  collected  for  new  construction  should  be  deducted.  If  a 
comparison  of  the  operating  expense  alone  is  desired,  then  interest  on 
the  bonded  debt  and  all  payments  of  principal  should  be  deducted. 

The  United  States  census  for  1919  shows  that  for  3,700,000  acres 
of  land  in  California  the  average  cost  for  water  was  $4.40  an  acre. 
This  average  appears  low  because  reclamation,  flood  protection,  and 
drainage  are  not  included.  It  is  an  average  for  both  fruit  and  general 
crop  land.  Some  of  the  old  gravity  rights  which  serve  both  fruit  and 
general  crop  lands  obtain  water  for  a  few  cents  an  acre,  while  the 
pumping  costs  for  highly  improved  fruit  land  may  be  $50  an  acre. 
There  are  large  public-utility  water  companies  serving  general  crop 
lands  at  a  charge  of  $2.50  an  acre.  The  average  cost  of  water  for 
general  crop  lands  is  believed  to  be  about  $3  an  acre. 

The  figures  given  in  table  7  show  the  range  of  annual  assessments 
in  the  irrigation  districts  of  California.  The  average  annual  assess- 
ment is  the  mean  cost  of  operation  and  maintenance  plus  an  average 
payment  for  the  redemption  of  bonds  during  the  life  of  the  present 

issues. 

TABLE  7 

Per-Acre  Irrigation-District  Assessments 

Remarks 
Gravity  water— general  crops 
Gravity  water — general  crops 
Gravity  water — general  crops 
Gravity  water— general  crops 
Gravity  water— general  crops 
Gravity  water — general  crops 
Fruit-producing  areas 
Fruit-producing  areas 
Fruit-producing  areas 
Fruit-producing  areas 


>er  of  irrigation 

districts 

District  tax 

7 

$0-2 

10 

2-4 

5 

4-6 

9 

6-8 

6 

8-10 

8 

10-12 

3 

14-16 

2 

16-20 

6 

20-25 

3 

25-30 

Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


49 


Figure  11  shows  the  proportion  of  the  district  taxes  paid  by  the 
revenue  received  from  power  by  the  five  irrigation  districts  of  Cali- 
fornia that  have  completed  their  storage  and  power  development.  The 
solid  black  part  of  the  bar  shows  the  tax  for  land  of  average  assessed 
value  and  the  total  length,  the  tax  for  land  of  highest  assessed  value. 
The  difference  between  columns  2  and  4  shows  the  assessment  paid  by 
the  power  revenue. 


Effect  of  Power  Development  in  Connection  with  Storage  on  the  Annual 
District  Taxes  in  Five  Irrigation  Districts 


1.  District-   Taxes   (Storage   and  Po\*ter  Omitted ) . 

Z.  District    Taxes    (Storage  and  Power   Included ) . 

3.  District     Taxes    (Power   Feature   Omitted) 

4.  District    Taxes    (Less  Po^/er    Pewenue ) 


LJ  Taxes  Per  Acre  High  Ua/ued  Lands. 
H  Taxes  Per  Acre  Ave-  \/alued  Lands . 


Fig.  11 

The  method  of  spreading  assessments  for  irrigation  may  greatly 
affect  the  total  cost  of  the  improved  farm,  as  well  as  annual  costs  of 
farm  operation.  The  original  irrigation  district  law  contemplated 
that  the  assessments  against  the  land  should  be  distributed  according 
to  its  quality,  the  lands  receiving  a  large  benefit  paying  more  than  the 
poor  lands  which  profit  less  from  the  irrigation  service.  Thus,  if  the 
indebtedness  of  the  district  were  increased  50  per  cent,  the  poorer 
lands  would  fare  the  same  as  the  good.  In  some  districts,  land  is 
assessed  not  according  to  quality  or  benefit  derived,  but  at  a  flat  rate 
per  acre,  which  makes  the  burden  on  the  poor  lands  much  heavier.  In 
other  districts,  a  system  is  adopted  which  is  a  compromise  between 
these  two,  the  land  being  classified  into  two  or  three  grades.  "Where 
much  additional  construction  is  necessary,  a  flat  rate  of  assessment 


50  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

may  be  extremely  burdensome  to  those  owning  unimproved  or  inferior 
land,  and  cause  retarded  development  in  the  district. 

When  the  assessment  is  distributed  according  to  the  quality  of  the 
land,  the  best  land  often  has  more  than  double  the  average  debt  of  the 
district  and  many  times  the  debt  of  the  poorest  land.  It  also  pays  a 
far  larger  proportion  of  the  operating  expense.  This  is  shown  graphic- 
ally in  figure  11,  page  49,  used  in  connection  with  the  discussion  of  the 
effect  of  power  installation  on  irrigation  taxes. 

In  the  reclamation  districts  of  California,  much  of  the  land  must 
be  irrigated.  In  these  projects  the  cost  of  operation  and  maintenance 
is  not  always  paid  annually.  In  many,  the  annual  expense  accumu- 
lates until  sufficient  indebtedness  exists  to  justify  the  cost  of  levying 
an  assessment.  If  the  farmers  are  not  in  a  position  to  pay  the  assess- 
ment, the  warrant  debt  is  refunded  by  bond  issue.  In  some  projects 
the  warrant  debt  equals  or  exceeds  the  bonded  debt. 

The  practice  of  irrigation  engineering  and  irrigation  construction 
is  constantly  improving  and  few  project  failures  in  these  days  can  be 
traced  to  defect  in  either.  The  cost  of  the  irrigation  system  has  been 
a  small  part  of  the  investment  required  to  change  grain  land  into 
improved  irrigated  land,  but  construction  costs  have  increased  greatly 
and  are  becoming  a  much  larger  item.  Because  it  takes  years  to 
complete  an  irrigation  system,  the  landowner  fails  to  realize  that  the 
construction  cost  today  may  be  but  a  small  fraction  of  the  amount  he 
must  ultimately  pay. 

District  Taxes  Paid  Before  Land  Is  Irrigated. — As  soon  as  con- 
struction is  begun  by  a  reclamation  or  irrigation  district,  the  annual 
assessments  levied  are  large  enough  to  be  a  burden  upon  the  non- 
irrigated  land.  The  owner  should  improve  the  land  at  once  or  sell  it, 
for  to  hold  will  require  the  payment  of  district  taxes  from  which  no 
added  revenue  will  result.  To  attempt  to  improve  more  land  than  his 
capital  warrants  will  probably  only  result  in  district  taxes  consuming 
his  principal. 

Records  show  that  in  irrigation  projects  the  irrigated  area  increases 
very  slowly.  A  large  part  of  the  district  taxes  is  paid  by  the  non- 
irrigated  lands.  The  average  amount  of  taxes  paid  before  the  land  is 
leveled  and  checked  and  before  it  derives  a  benefit  from  the  irrigation, 
approaches  the  cost  of  the  irrigation  system  itself.  If  imputed  interest 
is  added  to  the  above,  the  result  is  often  much  larger  than  the  con- 
struction cost. 

The  amount  paid  by  landowners  for  district  assessments  and  for 
operation  and  maintenance   costs  before  their  land  is  developed  is 


Bul.  435] 


AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION 


51 


perhaps  the  third  largest  item  in  the  development  of  agricultural  land. 
Like  the  price  paid  for  raw  land,  it  varies  widely  in  the  same  project 
because  some  land  is  prepared  for  irrigation  immediately,  while  other 
land  may  wait  for  years  to  use  the  water.  The  figures  given  in  table  8 
show  the  district  taxes  paid  from  the  date  of  organization  to  Janu- 
ary 1,  1926,  on  unimproved  grain  land  in  four  important  irrigation 
districts  of  California  and  the  total  imputed  interest  at  6  per  cent  on 
these  amounts  to  the  same  date.  The  figures  are  based  upon  the 
annual  district  assessments.  They  show  that  imputed  interest  on  taxes 
nearly  equals  the  amount  of  the  taxes  paid. 


TABLE  8 

District  Taxes  Paid  from  the  Date  of  Organization  to  January  1,  1926,  on 
Unimproved  Grain  Land  in  Four  Important  Irrigation  Districts  of  Cali- 
fornia and  the  Total  Imputed  Interest  at  6  Per  Cent  on  these  Amounts 
to  the  Same  Date 


District 

Taxes  computed 
from 

Taxes  paid 
per  acre 

Interest  per  acre 
on  taxes  to 
Jan.  1,  1926 

Total 

1 
2 
3 
4 

1888-1926 
1888-1926 
1910-1925 
1910-1926 

$39.81 
43.38 
44.78 
72.14 

$40.79 
42.49 
23.99 
31.78 

$80.60 
85.87 
68.75 

103.92 

The  variation  in  the  amounts  shown  is  due  to  differences  in  the 
construction  costs,  in  the  method  of  distributing  the  costs,  and  in  the 
age  of  the  projects.  Because  of  the  flat  rate,  of  assessment  used  in 
district  No.  4,  the  grain  lands  have  a  higher  bonded  debt  per  acre  and 
the  annual  district  taxes  are  larger  than  in  the  other  districts.  This 
accounts  for  the  large  amount  of  taxes  paid  by  unimproved  land  in 
this  district  as  compared  with  the  other  three  in  which  land  is  assessed 
according  to  its  productive  capacity.  In  district  No.  3  grain  land  has 
been  assessed  at  a  higher  value  than  in  Nos.  1  and  2  and  the  taxes  have 
been  higher  so  that  grain  lands  in  district  No.  3  have,  in  sixteen  years, 
paid  more  taxes  than  have  similar  lands  in  districts  1  and  2  in  twenty- 
five  years. 

Table  9  shows  the  taxes  paid  with  imputed  interest  at  6  per  cent 
and  in  addition  the  existing  bonded  debt  per  acre  for  the  non-irrigated 
grain  land  in  the  same  four  districts,  but  does  not  include  that  portion 
of  the  bonded  debt  carried  by  and  retired  from  the  sale  of  power.  In 
district  No.  3,  a  smaller  proportion  of  the  land  is  improved  than  in 
districts  Nos.  1  and  2,  so  there  is  less  difference  between  the  mean 
as^esoed  value  of  land  and  the  assessed  value  of  grain  land. 


52 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


These  districts  have  not  retired  any  of  their  bonds  and  the  pro- 
portion of  new  construction  paid  for  from  annual  assessments  does  not 
equal  10  per  cent  of  the  indebtedness.  The  bonded  debt  therefore 
closely  approximates  the  cost  of  the  irrigation  works.  Some  of  these 
grain  lands  have  paid  in  taxes  much  more  than  the  cost  of  the  irri- 
gation works.  In  district  No.  1,  grain  lands  having  a  bonded  debt  of 
$17.40  an  acre  have  paid  $39.81  in  taxes  up  to  January  1,  1926.  The 
imputed  interest  on  these  tax  payments  at  6  per  cent  interest  amounts 
to  $40.79,  a  total  of  $80.60  for  both  taxes  and  interest,  which  is  more 
than  four  times  the  present  bonded  debt.     In  district  No.  2,  grain 

TABLE  9 

Per-Acre  Costs  of  Taxes  Paid  on  Unirrigated  Lands,  together  with  Imputed 

Interest  and  Effective  Bonded  Indebtedness  in  Four, 

California  Irrigation  Districts 


1 

2 

3 

4 

5 

6 

7 

Irrigation 
districts 

Present  mean 

assessed 

value  of 

land 

Present 

assessed 

value  of 

grain  land 

Average 
bonded  debt 
less  bonded 
debt  paid 
by  power 
revenue 

Average 

bonded  debt 

of  grain  land 

less  debt  paid 

by  power 

revenue 

District 
taxes  and 
interest  at  6 
per  cent 
paid  by 
grain  land 

Total  cost 

to  grain 

lands  for 

irrigation 

system 

1 

$69.92 

$45 

$27.04 

$17.40 

$80.60 

$98.00 

2 

70.50 

44 

22.67 

14.15 

85.87 

100.02 

3 

55.00 

50 

34.51 

31.30 

68.75 

100.05 

4 

102.00 

100 

72.75 

71.33 

103.92 

175.25 

The  bonded  debt  of  grain  land  shown  in  column  5  is  obtained  by  multiplying 
the  average  per-acre  effective  bonded  debt  of  the  district  (column  4)  by  the 
ratio  of  the  assessed  value  of  grain  land  (column  3)  to  the  mean  assessed  value 
of  all  land  (column  2).  The  figure  in  column  6,  taxes  and  imputed  interest  paid 
by  grain  land,  is  taken  from  table  8.  Effective  bonded  debt  (column  4)  is 
obtained  by  subtracting  from  the  total  bonded  debt  the  capitalized  earnings 
per  acre  of  the  power  plant. 

lands  bonded  for  $14.15  an  acre  have  paid  $43.38  in  taxes  and  the 
imputed  interest  thereon  at  6  per  cent  is  $43.49,  or  a  total  of  $85.87, 
which  is  practically  six  times  the  bonded  debt.  In  district  No.  3,  where 
a  debt  of  $31.20  exists,  taxes  in  the  amount  of  $44.78  have  been  paid 
and  imputed  interest  at  6  per  cent  is  $23.99,  or  a  total  of  $68.75.  In  all 
instances  the  taxes  have  exceeded  the  bonded  debt  and  the  taxes  and 
interest  greatly  exceed  the  cost  of  the  irrigation  works.  The  total 
cost  to  the  non-irrigated  grain  lands  in  these  districts  for  the  irrigation 
system  includes  the  bonded  debt,  the  taxes  paid  before  the  land  has 
been  leveled  and  checked  for  irrigation,  and  the  imputed  interest  on 
these  taxes.  For  district  No.  1,  it  is  shown  to  be  $98,  practically  six 
times  what  the  system  would  have  cost  had  the  lands  been  improved 
as  soon  as  water  was  available.    For  district  No.  2,  the  total  cost  is 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


53 


$100.02,  more  than  seven  times  the  cost  had  these  lands  been  irrigated 
as  soon  as  water  was  available.  In  district  No.  4,  the  cost  is  $175.25, 
about  two  and  one-half  times  the  cost  had  the  lands  been  leveled  and 
the  water  used  at  once. 

In  projects  where  the  land  is  assessed  on  a  basis  of  soil  quality,  it 
is  difficult  to  determine  the  total  taxes  paid  by  the  non-irrigated  lands, 
for  nearly  every  piece  of  land  is  assessed  at  a  different  rate.    Where 

TABLE  10 

Crop-Acreage  Reports,  1921  to  1925  Inclusive,  and  Estimate  of  Irrigated 
Area  in  California  Irrigation  District 


Crops 

1921 

1922 

1923 

1924 

1925 

Irrigated  area: 

Alfalfa 

2,360 
106 
390 

3,823 
379 
101 

5,191 
334 
203 

5,345 
322 

109 

7,220 
362 

380 

Total 

2,856 

3,463 
1,430 
1,930 
2,068 
8,891 

4,303 

2,790 

920 

650 

3,237 

7,597 

5,728 

1,129 
545 
1,765 
2,624 
6,063 

5,776 

511 

260 

3,296 

1,957 

6,024 

7,962 

Unirrigated  area: 

Wheat 

>      l,602f 

1,508 

706 

Total 

3,816 

Total  assessed  area 

Estimated  irrigated  area* 

11,747 
3,000 

11,800 
4,500 

11,791 
6,000 

11,801 
6,500 

11,778 
8,000 

*  A  large  part  of  the  district  is  reported  idle  or  unaccounted  for.  In  estimating  the  irrigated  area, 
part  of  the  unaccounted-for  area  was  considered  irrigated.  The  total  area  of  the  district  is  11,827  acres 
and  the  assessed  area,  which  is  slightly  less,  has  for  some  unknown  reason  varied  from  year  to  year. 
Although  crop  reports  compiled  by  the  district  seem  to  show  certain  discrepancies,  it  is  believed  that 
estimates  of  irrigated  acreage  are  approximately  correct. 

t  Wheat  and  barley. 


a  flat  rate  of  assessment  has  been  used,  the  district  taxes  paid  by  the 
irrigated  and  non-irrigated  lands  can  be  readily  calculated.  This  has 
been  done  for  a  certain  irrigation  district  which  was  organized  in 
1916.  Water  was  first  delivered  in  the  late  summer  of  1918.  The  first 
real  use  of  the  water  occurred  in  1919.  In  this  district,  the  dry  grain 
lands  have  been  flooded  before  seeding.  Such  use  of  the  water  will 
not  produce  enough  increase  in  yield  to  pay  the  district  taxes. 
Reported  yields  of  grain  by  the  district  show  slight  benefit  from  this 
use  of  water  and  therefore  such  lands  have  not  been  considered  irri- 
gated. The  district  does  not  charge  a  water  toll.  A  flat  assessment 
is  paid  by  all  lands  whether  irrigated  or  not.  Land  utilization  in  this 
district  from  the  years  1921  to  1925  inclusive,  is  shown  in  table  10. 

Table  11  is  based  upon  the  estimated  irrigated  area  shown  in 
table  10. 


54 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


The  total  irrigation  district  taxes  paid  per  acre  to  January  1,  1926, 
is  shown.  Taxes  are  due  in  two  installments  and  are  delinquent  June 
first  and  December  first,  the  year  the  assessment  is  levied.  In  this 
district  undeveloped  land  has  paid  $61.90  an  acre  of  taxes  and  if 
imputed  interest  at  6  per  cent  is  added,  this  amounts  to  $76.90.  The 
latter  approximates  the  expense  to  undeveloped  land  for  irrigation 

TABLE  11 
Taxes   paid  per  Acre  by  Non-Irrigated  Lands   in  a  California  Irrigation 
District  since  Its  Formation,  Total  Taxes  Paid  by  Irrigated  and  Non- 
Irrigated  Lands,  and  Imputed  Interest  at  6  Per  Cent  on  these  Amounts 


Year 

Per- 
acre 

assess- 
ments 
levied 

Com- 
pound 
amount 
on  SI. 00 
at  6% 
from 
pay- 
ment 
date  to 
Jan.  1, 
1926 

Assess- 
ment 

plus 

im- 
puted 
interest 
at  6% 

Non- 
irri- 
gated 
area  in 
acres 

Taxes 
paid  by 

non- 
irrigated 

land 

Taxes  and 
imputed 

interest  at 
6%  paid 
by  non- 
irrigated 
land 

Irri- 
gated 
area  in 
acres 

Taxes 
paid  by 
irrigated 

land 

Taxes  and 
imputed 
interest 
at  6% 
paid  by 
irrigated 
land 

1916 

0  90 

1  75 

1.58 

11,827 

$10,543.28 

$18,487.68 

0 

1917 

0.50 

1.65 

0.73 

11,827 

11,800.00 

9,751.79 

0 

0.50 

1.60 

0.80 

9,467.76 

0 

1918 

2.88 

1.56 

4.49 

11,827 

68,029.38 

52,994.21 

0 

2.87 

1  51 

4.34 

51,450.68 

0 

1919 

2.75 

1.47 

4.03 

10,327 

56,798.50 

42,127.78 

1,500 

$8,904.80 

$6,116.44 

2.75 

1.43 

3.92 

40,900.78 

5,938.29 

1920 

3.38 

1.38 

4.68 

9,327 

62,957.25 

43,914.79 

2,500 

17,491.65 

11,765.98 

3.37 

1.34 

4  53 

42,635.70 

11,423.28 

1921 

3.50 

1.30 

4.57 

8,827 

61,789.00 

40,193.50 

3,000 

20,720.60 

13,634.87 

'3.50 

1.27 

4.43 

39,022.82 

13,237.74 

1922 

4  00 

1  23 

4.92 

7,327 

58,616.00 

35,952.88 

4,500 

35,650.62 

22,014.73 

4.00 

1.19 

4.78 

34,905.69 

21,373.51 

1923 

4.50 

1.16 

5.22 

5,827 

52,443.00 

30,240.82 

6,000 

53,330.68 

31,068.54 

4.50 

1.13 

5.06 

29,360.03 

30,163.64 

1924 

4.50 

1.09 

4.92 

5,327 

47,943.00 

26,084.49 

6,500 

31,689.08 

57,799.04 

4.50 

1  06 

4.77 

25,324.74 

30,766.10 

1925 

4.50 
4.50 

1.03 

4.63 
4.50 

3,827 

24,443.00 

17,601.67 

8,000 

71,136.03 

36,771.00 
35,700.00 

1926 

3,027 

17,089.52 

8,800 

Total  to 

July,  1926 

61.90 

76.90 

$465,362.41 

$607,507.33 

$238,923.46 

$327,773.16 

district  taxes  that  produced  no  revenue.  The  undeveloped  lands  have 
paid  $465,362.41  of  the  $730,395.83  of  taxes  collected,  63.5  per  cent  of 
the  total.  This  is  the  equivalent  of  $39.40  for  every  acre  in  the  district. 
If  interest  at  6  per  cent  is  imputed  on  the  taxes  paid  by  the  unde- 
veloped land,  the  amount  is  $607,507.33,  which,  if  divided  by  the 
district  area,  11,827,  is  $51.35.  This  amount  per  acre  for  the  entire 
district  area  is  a  conservative  approximation  of  the  irrigation  district 
cost  for  the  non-irrigated  lands.    This  is  one  of  the  outstanding  dis- 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION 


55 


tricts  of  the  state.  The  district  is  developing  very  rapidly.  In  fact, 
few  develop  so  quickly.  In  1926,  74  per  cent  of  the  district  was 
irrigated,  but  before  the  lands  are  all  developed  to  use  water,  the  taxes 
paid  by  the  non-irrigated  lands  may  total  $50  an  acre  and,  with 
interest,  exceed  $75  an  acre  for  every  acre  in  the  district.  The  cost 
of  delayed  development  is  seldom  adequately  considered  by  those 
planning  project  development. 

TABLE  12 

Number  of  Ownerships  in  South  San  Joaquin  Irrigation  District  from 
1910-1925,  Grouped  According  to  Size  in  Acres 


Size 

1925 

1924 

1923 

1922 

1921 

1920 

1919 

1918 

1917 

1916 

1915 

1914 

1913 

1912 

1911 

1910 

5  acres  and 

under 

1145 

917 

204 

154 

169 

134 

159 

135 

99 

98 

85 

68 

53 

42 

32 

23 

6-10 

313 

291 

294 

277 

254 

247 

237 

222 

196 

188 

168 

152 

129 

115 

94 

81 

11-15 

140 

128 

126 

124 

137 

118 

111 

88 

93 

89 

75 

63 

62 

54 

45 

36 

16-20 

533 

455 

436 

414 

396 

371 

353 

320 

339 

274 

246 

240 

201 

179 

145 

125 

21-30 

230 

202 

199 

214 

201 

169 

168 

124 

119 

99 

89 

95 

106 

97 

70 

70 

31-40 

297 

257 

260 

240 

232 

237 

215 

194 

172 

170 

173 

150 

132 

119 

115 

95 

41-50 

89 

70 

66 

69 

65 

45 

52 

50 

45 

46 

44 

61 

52 

49 

40 

38 

51-70 

88 

71 

65 

69 

67 

72 

63 

61 

50 

51 

49 

39 

33 

36 

28 

25 

61-80 

122 

108 

103 

111 

108 

100 

98 

90 

82 

84 

75 

80 

81 

68 

58 

49 

81-100 

42 

33 

32 

31 

34 

35 

36 

39 

31 

13 

30 

31 

26 

17 

20 

22 

101-150 

77 

66 

62 

61 

64 

61 

56 

52 

62 

54 

55 

53 

50 

54 

49 

41 

151-200 

27 

26 

26 

23 

23 

27 

28 

31 

35 

42 

41 

45 

43 

52 

65 

69 

201-300 

10 

10 

15 

14 

12 

12 

17 

18 

24 

23 

23 

19 

30 

27 

25 

21 

301-100 

8 

3 

7 

10 

16 

14 

16 

20 

23 

22 

23 

20 

25 

20 

25 

23 

401-500 

3 

2 

2 

4 

1 

3 

5 

3 

5 

8 

9 

11 

10 

13 

11 

10 

501-1000 

5 

4 

3 

3 

5 

3 

5 

5 

7 

5 

7 

9 

8 

12 

12 

15 

1001-1500 

0 

0 

0 

0 

0 

2 

0 

1 

0 

0 

0 

0 

1 

2 

2 

2 

Over  1500 

0 

0 

0 

0 

0 

0 

1 

1 

1 

1 

2 

2 

2 

2 

2 

3 

Total  farm 

ownership.. 

3129 

2643 

1900 

1818 

1784 

1650 

1620 

1454 

1383 

1267 

1194 

1138 

1044 

958 

838 

748 

Total  farm 

acreage... 

66871 

66871 

66871 

66275 

66871 

65049 

67446 

67241 

67394 

67327 

68102 

69870 

70195 

70195 

70195 

Average  size 

of  farm.... 

30.25 

35.1 

35.2 

34.5 

37.4 

40.7 

40.1 

46.4 

48.6 

53.1 

56.3 

59.8 

66.9 

73.2 

83.7 

93.7 

History  shows  that  in  irrigated  areas  the  trend  is  towards  smaller 
and  more  intensively  cultivated  farms.  The  development  of  irrigated 
land  is  accomplished  by  incoming  settlers  and  not  by  the  resident 
landowners  or  large  capitalists  seeking  an  investment.  Large  investors 
who  have  constructed  expensive  irrigation  and  reclamation  projects 
have,  it  is  true,  sometimes  been  forced  to  improve  large  areas  in  order 
to  pay  interest  on  the  investment  while  selling  the  land.  For  the  most 
part,  however,  the  small  holder  has  been  the  principal  factor  in  land 
development.  This  being  true,  it  is  apparent  that  conditions  should 
be  made  favorable  for  inducing  settlers  to  take  up  land.  Table  12 
shows  the  change  in  size  of  ownership  that  has  taken  place  in  the 


56 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


South  San  Joaquin  Irrigation  District,  one  of  the  largest  and  best 
known  of  the  state.17  The  large  ownerships  that  existed  before  the 
district  was  formed  have  been  gradually  broken  up  into  smaller  and 
smaller  units,  and  the  average  size  of  a  farm  in  1910,  93.7  acres,  has 
been  reduced  to  30.25  acres  in  1925. 


TABLE  13 

Number  of  Ownerships  in  Irrigation  and  Reclamation  Districts  in  1024* 
Grouped  According  to  Size  in  Acres 


Irrigation  districts 

Reclamation 

districts 

Drain- 

I   o 

a 

T3 

CO  -*t< 

CO.O 

CO  iO 

co  <**< 

CO  00 

age 
Dist. 

Size  of 

o  £ 

CO 

O 

4,  a 

5° 

0° 

P° 

QS 

52 

No. 

ownerships 

<JJ  p 

a§ 

3 

— ;  6 

J  d 

— *  6 

p-j  6 

_•  6 

100 

fl  o 

CI 

&S 

J 

a>  3 

g£ 

<o 

M 

oo 

£ 

fflPQ 

« 

ti 

ti 

1 

P4 

Acres 

Less  than  5 

51 

10 

10 

64 

30 

91 

4 

34 

15 

1 

7 

6-10 

52 

11 

30 

65 

30 

92 

10 

50 

2 

3 

8 

11-15 

45 

14 

30 

28 

9 

107 

10 

18 

5 

1 

13 

16-20 

45 
57 

15 
17 

34 
24 

28 
29 

10 
20 

107 
61 

10 
14 

17 
9 

6 
6 

13 

21-30 

3 

9 

31-40 

37 

21 

48 

11 

15 

149 

9 

15 

5 

3 

19 

41-50 

25 

10 

20 

4 

14 

30 

8 

7 

2 

2 

5 

51-60 

14 

29 

4 

8 

20 
33 

4 
9 

7 
16 

29 

78 

7 
6 

3 
13 

2 
3 

11 

61-70 

19 

81-100 

25 

9 

12 

4 

9 

19 

4 

3 

2 

3 

2 

101-150 

15 

10 

28 

4 

20 

56 

7 

10 

3 

3 

14 

151-200 

13 

8 

24 

5 

13 

35 

6 

9 

3 

4 

10 

201-300 

12 

5 

10 

6 

14 

32 

9 

3 

4 

4 

6 

301-400 

3 

2 

23 

3 

38 

6 

2 

2 

6 

4 

401-500 

3 
3 
1 

10 

27 
7 
13 

3 

1 
4 

20 
51 

9 
29 

4 
3 

1 
1 

2 

1 
4 

2 
6 

5 

501-1000 

2 

3 

1001-1500 

1 

Over  1500 

1 

2 

2 

Total 

430 

146 

403 

265 

215 

1,033 

117 

195 

64 

46 

151 

Area  in  acres  of 

each  district 

31,409 

10,001 

117,723 

14,110 

17,600 

218,743 

14,516 

8,784 

19,580 

53,948.86 

18,806 

Average  size  in 

73.04 

68.5 

292.11 

53.24 

81.86 

211.75 

124.07 

45.05 

305.94 

1172.80 

124  54 

*  Compiled  from  assessment  rolls  of  the  districts. 

By  comparing  the  size  of  ownerships  in  the  South  San  Joaquin 
Irrigation  District  with  those  in  several  of  the  recently  constructed 
projects,  an  impression  may  be  gained  of  the  possibilities  of  future 
development  and  increase  in  population  within  these  projects.  Table 
13  is  presented  for  the  purpose  of  making  this  comparison.  If  these 
figures  were  given  in  terms  of  percentage  of  total  acreage  rather  than 

17  These  figures  were  obtained  from  the  secretary  of  the  district. 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  57 

in  numbers  of  holdings,  the  amount  of  land  still  in  larger  holdings 
would  be  even  more  striking. 

More  data  should  be  compiled  to  show  the  costs  of  delayed  settle- 
ment in  our  projects  and  the  factors  that  retard  or  foster  development. 
The  time  element  in  project  development  must  be  more  accurately 
determined  if  economical  irrigation  development  is  expected. 

Cost  of  Land  Improvement. — The  development  of  irrigated  farms 
today  is  a  different  process  from  that  typical  of  settlement  in  earlier 
periods.  A  few  years  ago  it  was  possible  to  develop  a  farm  with  little 
capital,  for  much  of  the  food  consumed  was  produced  on  the  farm. 
There  was  much  free  land  and  a  water  right  could  be  acquired  for 
little  or  nothing.  Subsistence  farming  (pioneer  agriculture)  is  a  thing 
of  the  past.  Agriculture  in  the  irrigation  states  of  the  west  is  a  com- 
mercialized industry.  Better  transportation  facilities  and  improved 
marketing  methods  bring  farm  products  into  competition  with  distant 
producers.  The  keener  competition  in  production  and  marketing  and 
the  increased  standard  of  rural  life  demand  better  farming  methods. 

Landowners  contemplating  the  construction  of  an  irrigation  system 
rarely  realize  what  the  change  from  dry  to  irrigated  farming  involves. 
The  cost  to  level,  check,  ditch,  provide  laterals  and  turnout  boxes,  to 
fence,  and  to  construct  houses,  buildings,  and  barns,  is  greater  than  is 
usually  anticipated.  For  the  first  three  or  four  years  there  will  be 
a  continual  outlay  for  improvements  to  bring  the  land  into  full 
production. 

TABLE  14 

Average  Cost  per  Acre  of  Improvement  of  Seventy  California  Farms 

Items  Acre  cost 

Clearing,  leveling,  and  building  laterals $76.00 

House 25.00 

Barns,  outbuildings,  and  fence 18  00 

$119.00 

In  1922,  the  Division  of  Rural  Institutions  of  the  University  of 
California  gathered  actual  cost  data  on  the  expense  of  changing  grain 
and  brush  land  into  small  irrigated  farms.  The  average  development 
expense  on  seventy  of  these  farms,  which  varied  in  size  from  twenty  to 
forty  acres,  is  shown  in  table  14.  These  figures  included  merely 
necessities  and  they  do  not  include  the  cost  of  planting  a  crop  nor 
costs  of  equipment  and  livestock.  To  prepare  the  land  and  plant  it 
to  alfalfa  cost  $24  an  acre  and  to  prepare  and  plant  to  orchard,  $55 
an  acre  additional,  bringing  the  total  per  acre  costs  up  to  $143  an 
acre  for  alfalfa  and  $174  an  acre  for  fruit-land  development  exclusive 
of  care,  irrigation  operation,  and  interest  during  the  non-productive 


58  UNIVERSITY   OF    CALIFORNIA — EXPERIMENT   STATION 

period.     These  costs  did  not  include  the  price  of  land  nor  costs  of 
irrigation  construction. 

The  problem  of  developing  fruit  land  is  different  from  that  of  the 
general  farm,  because  of  the  cost  arising  from  the  long  non-productive 
period  until  the  trees  come  into  bearing.  The  total  cost  of  fruit-land 
improvement  is  made  up  of  the  cost  of  preparing  the  land,  construct- 
ing ditches,  purchase  of  nursery  stock  and  protectors,  planting  and 
caring  for  trees  during  the  non-productive  period,  and  interest  on 
these  items  throughout  the  period  of  development.  Unlike  the  general 
farm,  there  is  little  or  no  income  for  several  years  to  offset  these  initial 
and  interest  costs.  A  typical  ten-acre  prune  orchard  in  the  Sacra- 
mento Valley  was  developed  during  the  years  1921-1925  inclusive,  at 
a  total  cost  of  $336  an  acre,  including  cost  of  land  at  $125  an  acre. 
The  itemized  statement  of  these  costs  is  given  in  table  15. 

TABLE  15 

Initial  and  Accumulated  Costs  of  a  Ten-Acre  Prune  Orchard  Having  a 
Three-Year  Development  Period 

Initial  Cost  of  Prune  Orchard 

Land,  10  acres  at  $125  an  acre $1,250 

Leveling,  including  farmer's  labor 509 

Clearing 45 

Nursery  stock  and  protectors 350 

36  days'  work  at  $3.50  (farmer's  own  time) 126 

Total $2,280 

Estimate  of  Total  Investment  in  Prune  Orchard  at  Bearing  Age — Fourth  Season 
First  year: 

Original  investment  an  acre $228 

Interest  first  year 14 

Care  of  orchard,  $7  a  man  and  team 20 

Cost  at  end  of  first  year $262 

Second  year: 

Cost  at  end  of  first  year $262 

Interest  on  second  year 16 

Care  of  orchard 20 

Cost  at  end  of  second  year $298 

Third  year: 

Cost  at  end  of  second  year $298 

Interest  third  year 18 

Care  of  orchard 20 

Cost  at  end  of  third  year $336 

A  very  complete  record  of  the  cost  of  developing  a  fig  orchard  on 
difficult  hardpan  land  is  given  in  table  16.  The  total  cost  of  $661.40 
an  acre  in  the  development  of  this  fig  orchard  includes  $469.18  an 
acre  actually  spent  in  the  purchase  and  development  of  the  land; 
$22.70  represents  accumulated  taxes  during  development;  $169.52  is 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  59 


TABLE   16 

Cost  per  Acre  Incurred  in  the  Development  of  a  Fig  Orchard  on  Hardpan 

Land,  1918-1923 

Cost  Tax  Interest  Total 

Raw  land,  an  acre $200.00 

Leveling  and  water,  an  acre 75.00 

Interest  on  cost $115.50 

Cost  and  interest  on  land  (6  years  at  7  per  cent) $390. 50 

First  year 

Planting  to  trees,  30'  x  30',  or  46  trees  an  acre: 

Staking .". $.015 

Drilling  and  shooting 10 

Powder,  caps  and  fuse  (2  sticks  dynamite, 
1  cap,  2  ft.  fuse) 195 

Excavation  hardpan 15 

Filling  holes 09 

Restaking 015 

Digging  and  planting 12 

Puddling  trees 08 

Filling  holes 02 

Nursery  stock 25 

$1,035 
Contingent  expense 065 

Cost  per  tree  planted $1. 10 

Planting  46  trees  an  acre  at  $1.10 50. 60 

Cultivation: 

Disking  (3  times) '. $4.50 

Irrigation: 

Furrowing  and  irrigating $.90 

Breaking  ridges 60 

Running  water  (labor) 2.00 

Spading  around  trees 1.86 

Disking  (2  times) 3.00 

8.36 

Irrigating  second  time 8.36 

Disking  (1  time  to  make  dust  mulch) 1.50 

22.72 

Tax  and  water  tax $3.31 

Interest  on  improvements  and  taxes  (5J  years  at  7 

percent) 29.50 

Total  upkeep,  taxes,  and  interest 106. 13 

Second  year 

Care  and  cultivation $22.72 

Replanting  (average  5  trees  an  acre) 2.35 

Total 25.07 

Tax  and  water  tax 3.36 

Interest  on  upkeep  (4£  years  at  7  per  cent) 8.95 

Total  upkeep,  taxes,  and  interest 37.38 

Third  year 

Care  and  cultivation $22. 72 

Replanting  (average  3  trees  an  acre) 1.41 

Pruning 50 

Total 24.63 

Tax  and  water  tax 3.54 

Interest  on  upkeep  and  taxes  (3£  years  at  7  per  cent)..  6. 90 

Total  upkeep,  taxes,  and  interest 35  07 


60 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


TABLE  16— (Continued) 


Fourth  year 

Care  and  cultivation $22. 72 

Pruning 75 


Total 

Tax  and  water  tax 

Interest  on  upkeep  and  taxes  (2|  years  at  7  per  cent).. 

Total  upkeep,  taxes,  and  interest 

Fifth  year 

Care  and  cultivation $22. 72 

Pruning 1 .  00 


Total 

Tax  and  water  tax 

Interest  on  upkeep  and  taxes  (1?  years  at  7  per  cent).. 

Total  upkeep,  taxes,  and  interest 

Sixth  year 

Care  and  cultivation $22. 72 

Pruning 1.25 


Total 

Tax  and  water  tax 

Interest  on  upkeep  and  taxes  (|  year  at  7  per  cent).... 

Total  upkeep,  taxes,  and  interest 

Total  cost  of  land,  improvements,  care,  and  cultivation, 
taxes  and  interest  on  investment,  bringing  the  trees 
to  6  years  old 

Summary: 

Land,  leveling  and  water $275.00 

Planting  and  first  year 76.63 

Second  year's  upkeep 28.43 

Third  year's  upkeep 28. 17 

Fourth  year's  upkeep 27.11 

Fifth  year's  upkeep 27.74 

Sixth  year's  upkeep 28.80 


$491.88 
$169.52 


Cost 


23.47 


Tax 


3.64 


Interest        Total 


4.74 


31.85 


23.72 


4.02 


2.91 


30.65 


23.97 


4.83 


$469.18 


$22.70  $169.52 


interest  6  years  at  7  per  cent.... 
interest  5£  years  at  7  per  cent., 
interest  4|  years  at  7  per  cent., 
interest  3J  years  at  7  per  cent- 
interest  2£  years  at  7  per  cent., 
interest  lj  years  at  7  per  cent., 
interest  3  year  at  7  per  cent 


$661.40 

$115.50 
29.50 
8.95 
6.90 
4.74 
2.91 
1.02 

$169.52 


Total $661.40 


interest  at  7  per  cent.      If  the  land  had  not  been  hardpan  land,  the 
total  cost  would  have  been  approximately  $623  an  acre.18 

Peach  orchards  come  into  bearing  somewhat  earlier  than  figs.  Cost 
for  the  improving  of  peach  lands  ordinarily  ranges  from  $200  to 
$400  an  acre,  exclusive  of  land  and  irrigation  construction.  Table  17 
gives  two  typical  examples  showing  development  costs  itemized.  The 
figures  relate  to  the  year  1921. 


!8  The  cost  directly  due  to  the  hardpan,  including  costs  of  drilling,  shooting, 
powder,  digging  hardpan,  filling  holes  and  restaking,  amounted  to  approxi- 
mately $25.30  an  acre,  which  would  amount  in  the  six-year  development  period 
to  approximately  $38  if  7  per  cent  interest  is  charged.  This  is  the  interest  rate 
actually  paid  by  those  developing  the  land;  $601  —  $38  =  $623.  Costs  per 
acre  for  handling  the  hardpan  were  computed  from  costs  per  tree,  given  in 
table  16,  multiplied  by  46,  the  number  of  trees  per  acre. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  61 

TABLE   17 

Cost  per  Acre  of  Improving  Two  Typical  Peach  Orchards  in  1921 
in  the  Sacramento  Valley 

FARM  I 

Plowing $2.50 

Leveling 12.50 

Surveying  and  setting  stakes 1.00 

Cost  of  trees— 100  trees  at  50  cents 50. 00 

Planting— 100  trees  at  10  cents 10.00 

Cultivating,  spraying,  and  irrigating— $25  a  year  for  five  years 125. 00 

Spray  material— $1  an  acre  for  five  years 5.00 

Pruning: 

First  year  at  $0,025  a  tree $2.50 

Second  year  at  $0.05  a  tree 5.00 

Third  year  at  $0.08  a  tree 8.00 

Fourth  year  at  $0,125  a  tree 12.50 

Fifth  year  at  $0.14  a  tree 14.00 

42.00 

Burning  brush — $1.50  an  acre  for  five  years 7.50 

County  taxes 4.00 

Reclamation— district  taxes 3.18 

Interest  at  6  per  cent  on  original  investment  (including  land  at  $250  per  acre) 145.00 

Total  per-acre  cost,  five  years $407.68 

FARM  II 

Plowing,  etc $4.40 

Leveling 15.00 

Blasting 1.65 

Trees— 108  at  50  cents 54.00 

Surveying  and  planting  trees 21.60 

Cultivating,  plowing,  harrowing,  and  irrigating,  5  years 90.00 

Pruning  and  burning  brush,  5  years 20.00 

Spraying  trees,  5  years 10.00 

County  taxes :. 9.30 

Reclamation— district  taxes 6.00 

Interest  at  6  per  cent  on  original  investment  (including  land  at  $250  per  acre) 125.00 

Total  per-acre  cost  for  five  years $356.95 

The  sale  price  of  raw  land  in  an  irrigation  project  may  include 
part  or  all  of  the  costs  of  interest  imputed  during  the  time  the  land  is 
idle.  The  owner  of  the  raw  land  may  have  been  compelled  to  write  off 
a  part  of  this.  The  settler  may  assume  part  or  all  of  this  and  later 
write  it  from  his  assets  or  deduct  it  from  his  profits.  It  is  a  loss  to 
society  regardless  of  who  pays  it.  Common  costs  of  the  improved 
farm,  therefore,  will  ordinarily  range  between  $250  and  $600  an  acre. 
These  are  very  ordinary  and  many  farms  have  costs  which  are  outside 
of  these  values  at  both  extremes. 

To  carry  the  analysis  of  the  relation  of  these  costs  to  delayed  settle- 
ment to  a  conclusion  would  require  a  study  of  sale  price  of  land  in 


62  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

relation  to  cost  of  improvement.  There  are,  no  doubt,  some  interesting 
and  instructive  relations  existing  between  costs  and  prices  of  improved 
farms.19 

The  effect  of  price  changes  upon  irrigation  construction  costs  has 
been  discussed.  Just  as  estimates  of  construction  costs  vary  widely 
from  actual  expenditures,  costs  of  land  improvement  may  be  entirely 
different  from  expectations  because  of  changing  price  conditions.  Any 
change  in  the  price  level  affects  all  of  the  items  of  cost  that  make  up 
the  irrigated  farm,  not  merely  the  cost  of  irrigation  construction.  It 
is  evident  that  if  the  sum  of  these  items  of  cost  allows  only  a  small 
margin  of  profit,  a  slight  change  in  the  general  price  level  might  wipe 
out  this  margin  entirely.  The  trend  of  prices  should  be  carefully 
considered.  At  any  particular  time  the  trend  may  be  up,  horizontal, 
or  down.  If  prices  are  rising  when  the  project  is  undertaken,  and 
continue  to  rise  for  many  years  after  the  period  of  development,  the 
making  of  farms  should  be  profitable.  The  value  of  the  improved  land 
will  increase  as  prices  rise,  and,  since  the  land  was  improved  when 
construction  was  cheaper^  the  margin  of  profit  should  increase. 

If  the  price  level  does  not  change,  estimates  of  cost  will  remain 
valid  for  a  long  period.  When  the  trend  is  downward,  the  situation 
is  less  favorable.  A  much  larger  estimated  margin  of  profit  is  neces- 
sary to  justify  the  undertaking.  The  disadvantages  resulting  to  those 
who  developed  farms  during  the  period  of  advancing  prices  and  are 
now  paying  for  them  on  the  declining  price  level  have  been  discussed. 

It  is  unwise  to  attempt  prediction  of  the  price  level  in  the  next 
few  years,  but  the  general  direction  of  trend  can  be  anticipated. 
Prices  dropped  abruptly  in  the  fall  of  1920,  but  they  were  halted  about 
half-way  back  to  pre-war  level  and  have  remained  fairly  constant  since 
then.  There  is  much  difference  of  opinion  as  to  the  possibility  of 
maintaining  the  present  general  price  level.  If  the  United  States  were 
self-supporting  and  had  no  export  or  import  trade,  it  would  seem 
possible  for  the  present  price  level  to  be  maintained,  but  since  a 
number  of  the  products  of  the  United  States  compete  in  world 
markets,  our  prices  no  doubt  will  be  affected  by  foreign  conditions. 
If  history  repeats  itself,  a  gradual  general  lowering  of  prices  is  to  be 


19  In  this  connection,  the  following  statements  of  two  well-known  writers 
are     interesting: 

"Since  this  'land*  is  largely  man-made,  its  price,  when  more  is  needed,  must 
have  some  relationship  to  the  cost  of  creation."  (Warren,  G.  F.,  and  F.  A. 
Pearson.  The  agricultural  situation,  p.  227.  John  Wiley  &  Sons,  Inc.,  New 
York  City.     1924.) 

"Land  has  no  normal  price,  because  it  has  no  expense  of  production." 
(Ely,  Richard  T.  Outlines  of  economics.  1923  ed.  p.  502.  Macmillan  Co., 
New  York  City.     1923.) 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  63 

expected.  After  the  sharp  decline  of  prices  at  the  close  of  the  Civil 
War,  there  was  a  gradual  lowering  of  prices  for  the  next  thirty  years. 
The  same  thing  happened  after  the  War  of  1812.  Before  committing 
ourselves  to  any  of  the  large,  expensive  projects  of  the  future,  this 
relationship  should  at  least  be  borne  in  mind.  How  these  changes  in 
the  general  level  of  prices  affect  farm-development  costs  will  be  dis- 
cussed in  greater  detail  in  connection  with  the  effect  upon  total  capital 
requirement,  not  only  for  land  improvement  but  for  providing  farms 
with  livestock,  equipment,  and  the  necessary  capital  for  farm  oper- 
ation and  family  living  during  the  non-productive  period  while  raw 
land  is  being  turned  into  producing  farms. 

The  cost  of  improving  farm  land  and  of  preparing  it  for  irrigation 
depends  upon  the  experience  of  the  individual  farmer  in  farm  develop- 
ment, the  capital  available  to  improve  the  land,  the  scale  on  which 
development  is  carried  out,  costs  of  materials  and  wages,  the  amount 
of  work  the  farmer  hires  done,  and  the  degree  to  which  the  develop- 
ment is  carried.  The  experienced  subdivider  who  knows  how  to  plan 
the  farm  layout  properly  and  who  has  a  well-organized  outfit  to  level, 
check,  and  ditch  the  land,  and  to  erect  the  buildings,  can  improve 
property  more  cheaply  than  the  individual  farmer.  The  large  concern 
engaged  in  farm  development  usually  has  plenty  of  equipment  for  the 
work,  materials  are  purchased  at  wholesale,  and  the  work  is  done 
correctly  the  first  time.  Unfortunately,  owners  of  large  tracts  seldom 
have  the  capital  to  improve  the  land  before  it  is  sold.  Consequently, 
the  improvement  of  farm  land  is  usually  an  individual  undertaking. 
The  farmer  with  more  than  $5,000  capital  usually  stays  where  he  is, 
or  purchases  an  improved  farm  in  a  fully  developed  area.  Most 
farmers  improve  only  one  farm.  They  have  had  no  experience  in 
planning  a  farm  layout,  nor  in  leveling,  checking,  and  ditching  land. 
The  ditch  system  when  constructed  may  be  so  awkward  to  handle  that 
it  is  not  economical,  and  alterations  have  to  be  made  as  operation 
shows  up  the  defects.  The  type  of  checking  or  the  size  of  checks  may 
not  be  suited  to  the  topography  of  the  land  and  the  soil  type.  The 
inexperienced  farmer  does  not  plan  his  work  properly,  and  much  of 
it  is  poorly  done  and  has  to  be  done  over.  Most  farmers  have  to  do 
outside  work  in  order  to  live  during  the  period  of  development  and 
obtain  additional  capital  with  which  to  carry  on  improvements.  The 
more  the  farmer's  time  is  diverted  from  the  farm,  the  greater  are  the 
wastes  which  occur.  These  wastes  enter  as  a  cost  into  the  completely 
improved  farm. 

The  cost  of  agricultural  development  in  California  covers  a  large 
amount  of  work  carried  out  by  inexperienced  farmers.    This  excess  in 


64  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

cost,  above  that  which  would  prevail  if  the  work  were  done  efficiently, 
represents  not  only  a  cost  which  enters  into  the  price  of  the  improved 
land,  but  a  waste  to  society.  The  Fact-Finding  Commission,  which 
investigated  conditions  in  United  States  reclamation  projects  in  1923, 
describes  the  difficulties  of  farm  development  as  follows: 

"It  has  now  come  to  be  realized  that  the  preparation  of  land  for 
irrigation  is  a  task  which  requires  tools  for  which  the  farmer  has  no 
use  after  the  farm  has  been  made  ready  for  the  proper  distribution 
of  water.  The  only  safe  basis  for  doing  this  work  properly  is  an 
accurate  contour  survey.  The  size  and  direction  of  channels  or  borders 
can  be  determined  wisely  only  by  men  with  more  knowledge  and 
experience  than  the  average  farmer  possesses.  Leaving  the  inexperi- 
enced beginner  to  struggle  along  without  aid  or  direction  has  wasted 
more  money,  brought  more  discouragement,  and  driven  more  settlers 
off  their  farms  in  the  early  years  of  development  than  can  be  realized 
by  anyone  except  those  who  have  lived  on  these  settlements. '  '20 

"To  leave  this  costly  preparatory  work  to  be  done  by  the  settler 
who  lacks  team  strength,  implements,  and  practical  skill,  involves  a 
ruinous  waste  of  money  and  time.  Nothing  could  be  more  inefficient. 
Careful  consideration  should,  we  believe,  be  given  to  whether  the 
leveling  of  land  and  making  it  ready  for  the  application  of  water  is 
not  as  essential  a  part  of  reclamation  as  building  the  canals  and 
reservoirs.  "21 

Besides  the  skill  of  the  engineer,  land  development  requires  a 
knowledge  of  agriculture.  The  size,  length  and  slope  of  checks  depend 
upon  the  soil  type,  as  does  also  the  size  of  the  farm  unit.  To  arrange 
the  farm  layout  for  convenience  requires  the  skill  of  one  experienced 
in  planning  farm  development,  just  as  the  architect  is  needed  for 
planning  a  house  to  give  it  good  appearance  and  convenience. 

In  order  to  gauge  the  time  element  in  project  development,  it  is 
necessary  first  to  be  able  to  estimate  correctly  what  the  individual  can 
accomplish.  In  the  foregoing  analyses  of  costs  of  development  it  was 
not  possible  to  show  the  effect  of  the  experience  of  the  individual  or 
the  amount  of  capital  available  upon  the  costs  resulting.  A  man's 
ability,  equipment,  experience,  and  capital  are  factors  influencing  the 
ultimate  cost  of  development.  Cost  data  on  development  are  needed 
for  the  experienced  concern  and  for  possible  combinations  of  good, 
average,  and  poor  farmers  using  good,  average,  and  poor  equipment. 


20  Campbell,  Thomas  E.,  James  E.  Garfield,  Oscar  E.  Bradfute,  Clyde  C. 
Dawson,  Elwood  Mead,  and  John  A.  Widstoe.  Federal  reclamation  by  irriga- 
tion.    68th  Congress,  Senate  Document  92:128-129.     1924. 

2i  Loc.  cit. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION  65 

The  results  of  investigations  are  also  needed  which  show  the  effect  of 
lack  of  capital  upon  the  development  cost  by  (a)  delaying  develop- 
ment, (&)  causing  the  use  of  temporary  structures  and  makeshift 
methods,  (c)  increasing  interest  rates,  and  (d)  lowering  the  morale 
of  the  family.  The  cost  to  change  grain  land  into  improved  irrigated 
land  depends  upon  the  experience,  capital,  and  equipment  of  the 
individual.    It,  therefore,  varies  greatly  for  different  settlers. 

Of  the  items  of  cost  that  make  up  the  cost  of  irrigated  land,  the 
cost  of  leveling,  checking,  and  providing  the  buildings  is  the  second 
largest  item  and  usually  is  exceeded  in  amount  only  by  the  cost  of 
the  raw  land.  As  an  item,  it  varies  nearly  as  much  as  the  cost  of  the 
unimproved  grain  land. 

Capital  Requirements  for  Creating  Irrigated  Farms 

Even  under  favorable  conditions  of  costs,  lack  of  capital  for  farm 
purchase  and  development,  and  for  equipment,  livestock,  farm  operation 
and  living,  often  results  in  failure.  That  prospective  settlers  do  not 
have  sufficient  capital  to  develop  farms  under  irrigation  is  patent, 
but  the  real  economic  importance  of  this  fact  is  not  well  understood. 
There  are  those  who  admit  these  costs  but  argue  that  this  is  proof 
that  irrigation  projects,  which  cannot  attract  sufficient  capital  to 
develop  them,  should  not  exist.  Others  call  attention  to  delayed  settle- 
ment and  to  capital  requirements  for  farm  development  and  ask  that 
credit  be  extended  to  meet  them.  Still  others,  remembering  the 
condition  of  rural  credit  in  1920  and  1921,  declare  that  credit  for 
agricultural  development  would  be  harmful  rather  than  beneficial. 
Many  of  these  different  points  of  view  are  coincident  with  real  and 
conscientious  endeavor  to  arrive  at  a  constructive  solution ;  however, 
there  are  many  prejudices  entering  into  the  problem.  Some  arguments 
are  solely  the  result  of  personal,  financial,  or  political  interests.  How- 
ever, the  majority,  no  doubt,  would  favor  the  solution  which  will  result 
in  the  most  good  to  society  as  a  whole.  The  successful  farm  is  expected 
to  pay  for  its  own  production.22  Immediate  needs,  however,  in  the 
early  years  of  development,  demand  capital  from  sources  other  than 
the  farm  being  improved.  The  determination  of  gross  capital  require- 
ments necessitates  in  addition  to  an  analysis  of  costs  which  enter  into 
the  improved  farm,  an  estimate  of  cost  of  equipment  and  livestock,  as 
well  as  a  consideration  of  living  and  farm-operation  costs  during 
development.    Net  capital  requirements  to  be  derived  either  from  the 


22  There  are  exceptions  to  this  in  the  case  of  small  farms  which  are  designed 
only  to  supplement  the  income  and  to  provide  a  place  of  residence. 


66  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

original  capital  of  the  farm  purchaser  or  from  sources  of  credit  may 
be  determined  by  subtracting  probable  gross  returns  during  the 
period  of  development  from  the  sum  of  necessary  expenditures.  To 
show  adequately  the  actual  needs  of  settlers  in  improving  and 
equipping  irrigated  farms,  surveys  of  large  numbers  of  farms  would 
be  desirable.  Because  of  the  great  expense  involved  in  carrying  out 
such  studies,  however,  we  must  resort  to  the  case  method  in  presenting 
this  phase  of  the  subject.  After  reviewing  large  numbers  of  cases, 
typical  examples  have  been  selected. 

Capital  Needed  for  Improving  and  Equipping  the  General  Farm. — 
Recently  the  Central  Cost  Review  Board,  appointed  by  Secretary  of 
the  Interior  Work,  found  that  costs  of  development,  equipment,  and 
livestock  on  an  80-acre  dairy  farm  in  the  Newlands  Project,  Nevada, 
exclusive  of  original  cost  of  land  and  exclusive  of  irrigation  construc- 
tion costs,  amounted  to  nearly  $8,000.23  In  the  Spanish  Springs  unit 
of  the  same  project,  a  different  commission  estimated,  in  1924,  the 
cost  of  developing  and  equipping  a  50-acre  dairy  farm,  in  addition 
to  cost  of  land,  land  leveling,  and  irrigation  supply,  at  $7.415. 24 

The  detailed  statement  in  table  18  is  presented  to  show  the  capital 
required  to  develop  and  equip  with  machinery  and  livestock  a  small 
general  farm  typical  of  the  San  Joaquin  Valley.  Practically  $9,000, 
exclusive  of  payment  on  the  land,  were  needed  to  improve  and  equip 
this  farm.  It  is  not  elaborately  equipped — the  buildings  are  valued 
at  $3,459.  The  farmhouse  is  a  very  small  one  without  modern  improve- 
ments, and  was  constructed  at  a  cost  of  $1,000  including  the  farmer's 
labor  estimated  at  $426.  The  barn  is  not  completed  but  will  house 
double  the  present  herd  when  it  is  finished.  This  estimate  is  probably 
not  far  from  the  amount  which  should  be  expended  for  economy  of 
production  on  the  thirty  or  forty-acre  dairy  and  fruit  farm  in  the  San 
Joaquin  Valley.  The  livestock  on  this  farm,  valued  at  $3,100,  includes 
18  cows,  5  heifers,  1  bull,  and  2  horses.  The  capital  required  is  not 
excessive,  yet  thousands  of  settlers  are  struggling  along  attempting  to 
develop  their  farms  with  less  than  a  quarter  of  this  amount. 

Capital  Needed  for  Improving  and  Equipping  the  Fruit  Farm. — 
A  52-acre  peach,  fig,  and  prune  farm  in  the  San  Joaquin  Valley  was 
developed  and  equipped  at  a  cost  of  $25,384,  including  a  cost  of 
$10,400    ($200   an   acre)    for   raw   land.      The   total   cost   an   acre, 


23  Campbell,  Thomas  E.,  James  E.  Garfield,  Oscar  E.  Bradfute,  Clyde  C. 
Dawson,  Elwood  Mead,  and  John  A.  Widstoe.  Federal  reclamation  by  irrigation. 
68th  Congress  Senate  Document  92:126.     1924. 

24  Department  of  the  Interior,  Bureau  of  Reclamation.  Reports  on  the  engi- 
neering, agricultural,  and  economic  feasibility,  p.  227.  Government  Printing 
Office,  Washington,  D.C.     1925. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  67 

TABLE   18 

Capital  Bequirements  fob  Developing  a  34-Acre  Farm  in  the  San  Joaquin 
Valley,  California,  June,  1921-February,  1925 


Land,  34.23  acres  at  $250  an  acre 

Pipe  lines 

Alfalfa,  14J  acres  at  $33  an  acre  (including  land  prepara- 
tion)  

Pasture,  4  acres  at  $25  an  acre  (including  land  prepara- 
tion  

Vines,  4.5  acres  at  $235  an  acre  (including  land  prepara- 
tion)  

Trees,  2  acres  at  $142  an  acre  (including  land  prepara- 
tion)  

Buildings 

Equipment 

Household  goods , 

Livestock 

Hay  in  barn 

Operating  cash 

Cash  required  for  living,  operating  cost  and  farm  during 
period  of  development 


Total  value 
Feb.,  1925 

Farmer's  own 

labor  and  natural 

inventory 

increase! 

Cash 
requirements 

$8,558.00 

$8,558.00 

2,379.00 

2,379.00 

479.00 

$203.00 

276.00 

100.00 

90.00 

10.00 

858.00 

550.00 

308.00 

284.00 

200.00 

84.00 

3,459.00 

948.00 

2,511.00 

740.00 

740.00 

681.00 

681.00 

3,100.00 

1,159.00 

1,941.00 

216.00 

216.00 

100.00 

100.00 
3,000.00 

$20,954.00*  $3,366.00 

Total  cash  requirement $20,588.00 

Farm  income 3,070.00 


Net  cash  requirements  for  purchase  of  farm,  developing  it  and  equipping  it  with  livestock 

and  machinery 17,518.00 

Net  cash  requirements  for  development,  equipment,  and  livestock,  exclusive  of  land 8,960.00 

*  This  inventory  does  not  take  into  account  the  depreciation  which  has  occurred  during  the  five-year 
development  period. 

t  This  column  contains  that  part  of  the  inventory  which  is  due  entirely  to  natural  increase  of  live- 
stock or  crops  and  the  value  of  the  farmer's  own  labor  applied  in  making  improvements.  The  sum  of 
these  items  is  therefore  subtracted  from  the  total  value  of  land  and  improvements  to  obtain  net  cash 
requirements. 

therefore,  on  this  farm  at  the  end  of  the  first  year  of  development 
amounted  to  $488.  This,  however,  does  not  include  interest  and 
operation  costs  during  the  non-productive  period.  It  would  take  at 
least  four  years  more  for  production  to  reach  a  point  where  it  would 
bring  any  material  income.  If  money  could  be  obtained  at  6  per  cent 
interest,  this  $488  an  acre  would  amount  to  $653  an  acre  at  the  end 
of  the  five-year  development  period.  In  addition,  the  orchard  would 
probably  require  an  expenditure  of  approximately  $20  an  acre  each  year 
for  irrigation,  soil  preparation,  pruning,  and  replanting.  This  amount 
with  interest  at  6  per  cent  for  the  remaining  four  years  would  add 
$87  more  to  the  cost  an  acre,  bringing  it  up  to  a  total  of  $740.  This 
orchard  was  developed  during  the  peak  of  high  prices.  A  later  dis- 
cussion will  show  the  relation  of  these  development  costs  to  those  which 
might  prevail  in  other  years,  and  will  also  show  the  effect  of  high 
development  costs  during  the  periods  of  high  prices  upon  the  progress 


68  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

of  the  farmer  who  is  called  upon  to  repay  them  under  the  entirely 
different  economic  conditions  prevailing  after  the  war.  The  details 
of  these  costs  are  shown  in  table  19.  Other  examples  of  costs  of 
development  of  land  and  equipping"  farms  with  machinery  and  live- 
stock will  be  given  in  the  discussion  which  is  to  follow  concerning  the 
effect  of  price  changes  upon  costs  of  farm  development. 


TABLE  19 

Cost  of  Developing  a  52-Acre  Peach,  Prune,  and  Fig  Farm  in  Merced 
Irrigation  District,  1920* 

Cost  of  preparing  land: 

Land $200.00 

Leveling 14.00 

Subsoiling  and  disking 15.00 

Total  per  acre $229.00 

Cost  of  52  acres  of  land  ready  for  planting $11,908.00 

Cost  of  buildings,  well,  pumps,  etc.: 

Well,  360  feet  deep $1,000.00 

Pump,  900  gallons  a  minute 1,400.00 

Superintendent's  house 2,000.00 

Barn 1,500.00 

Tank  house,  windmill,  etc 500. 00 

Fences,  chicken  house,  etc 200.00 

Total  buildings,  well,  pump,  etc 6,600.00 

Cost  of  planting,  22'  x  22': 

20  acres  peaches  at  $36.00  an  acre $720.00 

10  acres  prunes  at  $36.00  an  acre 360.00 

11  acres  Black  Mission  figs,  interplanted  with  Muir  peaches— figs  44'  x  44', 

peaches  and  figs  22'  x  22' 396.00 

10  acres  Thompson  Seedless  grapes  at  $31.50  per  acre 315. 00 

Total  cost  of  planting 1,791.00 

Inventory  of  equipment: 

Automobile $600.00 

Disk  for  tractor 350.00 

Wagon 75.00 

Harrows 60.00 

Small  tools 50.00 

Spraying  machine 10.00 

Total  equipment 1,145.00 

Expenses: 

Automobile,  $40  a  month $480.00 

Depreciation  on  equipment 60.00 

Superintendent 1,800.00 

Hire  for  gas  tractor 600.00 

Extra  labor 400.00 

Operation  gas  tractor 600.00 

Total  expense  first  year,  including  operation  equipment  depreciation,  but  not 
first  cost  of  operating  plant $3,940.00 

Grand  Total $25,384.00 

*  This  expenditure  was  made  when  cost  of  labor  and  materials  was  at  a  maximum. 


BUL.  435]  .         AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION 


69 


The  Effect  of  Price  Changes  upon  Capital  Requirements. — The 
United  States  Department  of  Agriculture  and  the  United  States 
Bureau  of  Labor  Statistics  have  published  index  numbers  of  farm 
prices  and  of  the  wholesale  prices  of  all  commodities.  These  are  shown 
for  the  years  1910  to  1926,  inclusive,  in  figure  12.    Below  these  curves 


Eelative  Purchasing  Power  of  Farm  Products,  1910-1926 


Z5o 


200 


/so 


/sto 


/9/S  /S>ZO 

Fig.  12. — Data  from  table  20. 


/925 


70 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


is  drawn  a  curve  showing  the  ratio  of  the  index  numbers  of  farm 
prices  to  index  numbers  of  wholesale  prices  of  all  commodities.  This 
indicates  when  the  farmers  were  benefited  and  when  they  were  harmed 
by  the  changing  general  price  level.  When  the  ratio  is  high,  the 
farmers'  situation  is  better  than  when  it  is  low.  In  the  spring  of  1920, 
there  was  an  abrupt  drop  in  all  prices.  In  1921  farm  prices  had 
fallen  to  16  per  cent  above  the  pre-war  level  and  all  commodity  prices 
were  about  50  per  cent  above  the  pre-war  level.  After  1921,  both 
increased  until  1925,  and  since  then  have  decreased.  In  1926  the 
all-commodity  index  was  18  per  cent  higher  than  the  farm-price 
index.  The  index  numbers  from  which  figure  12  was  made  are  given 
in  table  20. 

TABLE  20 

Index  Numbers  of  Farm  Prices  and  of  All  Commodities,  1910-1926 


Index  numbers  of 

wholesale  prices  of  all 

commodities* 

Index  numbers  of 
farm  prices* 

Relative  purchasing 

power  of  farm 

products! 

1910 

103 
95 
101 
102 
100 
103 
129 
180 
198 
210 
230 
150 
152 
156 
152 
162 
154 

103 
95 
99 
100 
102 
100 
117 
176 
200 
209 
205 
116 
124 
135 
134 
147 
136 

100 

1911 

100 

1912 

98 

1913 

98 

1914 

102 

1915 

97 

1916 

91 

1917 

98 

1918 

101 

1919 

100 

1920 

89 

1921 

77 

1922 

82 

1923 

87 

1924 

88 

1925 

91 

1926 

88 

*  Data  from:  United  States  Department  of  Agriculture  Bureau  of  Agricultural  Economics.  Price 
indexes  for  May,  1927.    The  Agricultural  Situation  11  (7)  :8,  9.     1927. 

t  The  relative  purchasing  power  of  farm  commodities  is  obtained  by  dividing  the  index  number  of 
farm  commodities  by  the  index  number  of  all  commodities.  The  quotient  is  multiplied  by  100.  Base 
period  1909-1914. 

Relative  prices  of  California  farm  products  have  varied  widely. 
The  economic  situation  in  the  irrigated  area  varies  with  the  type  of 
farming.  The  agricultural  situation  is  different  for  every  farmer. 
Figure  13  shows  relative  wholesale  prices  of  the  principal  California 
crops  which  comprise  approximately  70  per  cent  of  the  value  of  all 
crops  grown.  It  can  be  seen  from  the  figure  that  prices  of  different 
commodities  vary  greatly. 

The  prices  of  all  commodities,  since  1921,  have  remained  at  about 
55  per  cent  above  the  level  of  pre-war  prices.    The  agricultural  prices 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


71 


The  Dispersion  of  Wholesale  Prices  of  California  Agricultural 

Commodities 


440 

4ZO 

400 
380 
360 
340 
3ZO 
300 
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zzo 

zoo 

180 
160 

mo 

120 
100 
80 
60 
40 
20 


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/9lO      II         IZ        13        14       If        16        17        IB        19       ZO       Zl        22       Z3      Z4       ZS 
Table  Grapes  Po-f-a+oes  >= 


Peaches 
Prunes  - 
Ratstns  — 


._     Lemons 
—     Oranges- 
—     Wa/ncrts 


A/fa /-fa 

Barley 

•   ■   • — •— •     Whea-t 


Fig.  13. — Price  relatives  of  agriculture  commodities  were  prepared  by  Division 
of  Agricultural  Economics,  College  of  Agriculture,  University  of  Califronia, 


72  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

seem  to  be  gradually  rising  to  this  level.  Those  who  purchased  land 
or  improved  farms  during  the  period  of  high  prices  from  the  summer 
of  1916  to  the  fall  of  1920  purchased  and  improved  their  farms  with 
dollars  that  were  relatively  cheap  and  are  now  repaying  with  dollars 
that  are  relatively  dear. 

Effect  of  Price  Changes  upon  Repayment  of  Farm-Development 
Costs. — The  effect  of  price  changes  upon  the  amount  of  capital  avail- 
able for  the  repayment  of  farm  development  costs  is  shown  by 
examples  taken  from  actual  farm  records  in  various  parts  of  the  state. 
These  figures  also  illustrate  how  a  farmer's  whole  future  progress 
may  be  bound  up  with  the  circumstance  of  his  having  begun  farming 
at  a  particular  time. 

An  83 -acre  dairy  farm  was  purchased  in  May,  1918.  Most  of  the 
development  costs  were  incurred  in  that  year.  The  utilization  of  land 
in  1925  included  eighty  acres  of  alfalfa  and  three  acres  in  roads, 
ditches,  buildings,  and  a  small  family  vineyard.  The  1925  receipts 
from  the  farm,  amounting  to  $4,375,  came  principally  from  dairy 
products.  About  $750  worth  of  hay  was  sold  and  some  revenue  was 
obtained  from  the  sale  of  poultry  and  calves.  The  family  expenses 
and  the  cost  of  operating  the  farm,  not  including  the  farmer's  labor 
nor  interest  on  his  capital,  amounted  to  $2,053.  This  does  not  include 
interest,  depreciation,  nor  value  of  the  owner's  labor  because  the  object 
is  to  determine  actual  capital  available  during  the  amortization  of  the 
debt.    These  expenses  are  shown  in  detail  in  table  21. 

TABLE  21 
Expense  of  Operating  an  83-Acre  Dairy  Farm  in  1925 

Irrigation— district  taxes  (excluding  interest) $381.00 

Reclamation— district  taxes 197.00 

County  taxes 280.00 

Labor 225.00 

Feed 30.00 

Automobile  expense 65.00 

Clothes 100.00 

Food 725.00 

Doctor  bills 50.00 

$2,053.00 

The  amount  available  in  1925  for  payment  of  principal  and  interest 
on  indebtedness  amounted  to  the  difference  between  the  gross  receipts, 
$4,375,  and  the  expenses,  $2,053.  This  farmer,  in  1925,  therefore,  could 
have  paid  $2,322  towards  the  amortization  of  his  debt,  and  the  pay- 
ment of  interest  on  his  development  debt  and  the  bonded  debt  of  the 
district.  This  difference  between  gross  income  and  expenditures  in 
one  year,  however,  is  no  indication  of  what  they  are  likely  to  be  in 


Bul.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  73 

others.  Although  the  farm  operations  may  be  carried  on  in  a  uniform 
manner  from  year  to  year  and  the  yields  may  be  approximately  the 
same,  there  are  great  variations  in  prices  of  products  sold  by  the 
farmer  and  in  costs  of  farm  operation.  His  ability,  therefore,  to  repay 
his  indebtedness  varies  greatly  from  year  to  year.  In  order  to  show 
the  effect  which  changing  prices  and  costs  have  upon  the  amount 
available  for  repayment  of  principal  and  for  the  payment  of  interest 
on  this  particular  farm,  the  operating  expense  each  year  from  1914  to 
1926  was  figured,  using  the  same  items  of  expense  as  in  1925  and 
applying  the  prices  that  prevailed  during  the  different  years.  The 
physical  output  of  the  farm  is  considered  constant  for  the  purpose  of 
this  illustration.  The  upper  curve  on  the  left  side  of  figure  14  shows 
the  value  of  gross  income  as  it  would  have  been  during  the  years  1914 
to  1925  inclusive,  had  the  program  been  carried  out  in  each  of  these 
years  just  as  it  was  in  1925.  For  1925  it  will  be  seen  that  the  figures 
correspond  with  those  already  given ;  that  is,  a  gross  income  of  $4,375 
and  expenditures  amounting  to  $2,053.  The  gross  income  curve  is 
made  up  from  the  changing  prices  of  each  item  of  income  applied  to 
the  physical  volume  of  production  of  1925.  The  lower  portion  of  the 
diagram  shows  the  expenses,  exclusive  of  interest  and  owner's  labor, 
as  they  would  have  been  during  these  same  years  had  the  same  services 
and  materials  been  utilized  as  in  the  program  of  1925.  The  curve  of 
expenses  has  been  derived  from  the  1925  expense  items  adjusted  to 
what  they  would  have  been  in  the  other  years  with  the  prevailing 
prices  of  those  years.  The  difference  between  these  two  curves  shows 
what  the  farmer  would  have  available  for  debt  amortization  and 
interest  during  these  years,  assuming  the  physical  production  of  the 
farm  did  not  change,  and  assuming  that  he  received  the  same  items 
and  services  in  return  for  his  expenditures.  These  curves  show  that 
1917,  1918,  1919,  and  1920  were  prosperous  years.  The  years  1921 
through  1925  show  a  larger  gross  money  income  than  before  the  war. 
Operating  expenses  and  taxes  wrere  higher,  but  in  general  a  larger 
amount  became  available  for  debt  amortization  that  would  have  been 
available  under  conditions  of  prices  as  they  existed  before  the  war. 
For  the  farmer  purchasing  his  farm  in  1925,  this  advantage  would  be 
offset  to  some  extent  by  greater  development  costs.  Since  most  of  the 
farm  was  improved  in  1918,  the  owner  was  able  to  benefit  by  two  years 
of  relatively  high  crop  prices,  1919  and  1920. 

The  actual  cash  outlay  for  the  farm  development  was  $13,425.  It 
included  the  cost  of  leveling,  checking,  ditching,  fencing,  buildings, 
equipment,  and  livestock,  but  not  the  farmer's  labor,  nor  interest  on 
the  investment.    The  curve  on  the  right  side  of  figure  14  derived  from 


74 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


changing  prices  applied  to  the  physical  improvements  made  in  1918, 
shows  what  the  cost  to  develop  this  farm  would  have  been  for  the  years 
1914  to  1925  inclusive,  had  the  same  material  and  labor  as  was  applied 
in  1918  been  applied  in  any  one  of  these  other  years.  This  develop- 
ment would  have  cost  less  if  made  prior  to  the  summer  of  1918,  and 
more  if  made  at  any  time  during  the  years  1919  to  1925  inclusive,  but 

Gross  Income,  Expenses  Exclusive  of  Interest,  and  Costs  of  Development 
of  an  83-Acre  Irrigated  California  Dairy  Farm 


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s 

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Buildings,   Farm   Eqcipmen-t, 

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Fig.  14. — This  farm  was  developed  in  1918.  Accurate  estimates  of  income 
and  expenditures  were  determined  in  1925.  The  curves  of  gross  income  and 
expenses  indicate  what  the  money  income  and  expense  for  the  years  1914  to 
1924  would  have  been  with  the  same  physical  output  as  that  obtained  in  1925. 
The  diagram  to  the  right,  showing  the  cost  of  land  leveling  and  other  improve- 
ments, shows  what  these  same  improvements,  which  were  installed  in  1918, 
would  have  cost  had  they  been  installed  in  any  of  the  years  between  1914  to 
1925,  inclusive.  The  difference  between  gross  income  and  the  expenses,  exclu- 
sive of  interest,  the  owner's  labor,  and  depreciation,  indicates  the  amount 
available  for  the  payment  of  bond  principal  and  interest  of  the  irrigation 
project.  The  average  cost  of  development  of  the  character  carried  out  on  this 
farm  amounted  to  47  per  cent  more  in  the  post-war  years  1923  to  1925,  inclu- 
sive, than  if  installed  in  1914.  In  the  case  of  this  farmer,  however,  the  amount 
available  for  repayment  of  principal  and  interest  was  87  per  cent  greater  in 
these  post-war  years  than  in  the  pre-war  year  of  1914. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  75 

since  the  prices  of  labor  and  materials  have  been  falling,  the  cost  of 
the  development  in  1925  would  have  been  nearly  as  low  as  in  1918. 

The  cost  of  development  in  1918  was  44  per  cent  greater  than  it 
would  have  been  had  the  farm  been  developed  in  1914.  At  costs  pre- 
vailing in  1920,  it  would  have  required  an  outlay  110  per  cent  greater 
than  in  1914.  If  developed  in  1925,  the  costs  would  have  been  46  per 
cent  greater  than  in  1914,  and  only  iy2  per  cent  greater  than  in  1918. 

If  this  farmer  had  not  had  a  large  amount  of  capital  to  begin  with, 
he  would  have  been  compelled  to  leave  the  farm  before  he  had  carried 
out  its  development.  The  statement  of  the  financial  condition  of  this 
farmer,  May,  1918,  January  14,  1924,  January  1,  1925,  and  January  1, 
1926,  indicates  the  progress  he  has  made  (table  22). 

TABLE  22 

Financial  Statement  of  California  Farmer  Showing  Progress  on  an  83 -Acre 
Dairy  Farm  under  Conditions  of  High  Cost  of  Land  and  Water 

Assets:  May,  1918         Jan.  14,  1924        Jan.  1,  1925         Jan.  1,  1926   ] 

Land $14,575  $14,575  $14,575 

Leveling  and  ditches 3,200  3,200  3,200 

House 3,500  3,500  3,500 

Other  buildings 2,300  2,300  2,300 

Well  and  water  supply 200  200  200 

Cash $15,000                           0  0  0 

Livestock 3,675  3,175  3,200 

Feed  and  hay 900  900  975 

Equipment 450  450  1,200 

Other 150  150  150 

$15,000  $28,950  $28,450  $29,300 
Liabilities: 

Debt  on  land $10,000  $10,000  $10,000 

Land-company  loan 2,000  2,000  2,000 

$12,000  $12,000  $12,000 

Net  Worth $15,000  $16,950  $16,450  $17,300 

*  Inventory  values  represent  the  1918  costs  and  are  not  corrected  for  depreciation  and  deflation. 
Deflation  in  the  case  of  this  farm,  however,  amounts  to  practically  nothing  since  development  costs  in 
1918,  for  this  type  of  development,  were  approximately  the  same  as  in  the  years  1923,  1924,  and  1925. 

Figure  15  shows  the  effect  of  changing  prices  upon  the  amount 
available  for  payment  of  principal  and  interest  in  amortizing  the 
development  debt  on  a  30-acre  farm.  In  1925,  this  farm  had  19.5  acres 
in  alfalfa,  5  acres  in  barley,  1.5  acres  in  alfalfa  hog  pasture,  1  acre 
devoted  to  buildings,  1  acre  in  family  orchard,  garden  and  vineyard, 
1.5  acres  in  melons  and  truck,  and  0.5  acre  occupied  by  irrigation 
ditches.  Five  acres  of  blackeye  beans  were  raised  as  a  second  crop 
after  the  barley.  Receipts  in  1925  amounted  to  $3,096.95,  while  cash 
expenses  amounted  to  $2,102.06.  Receipts  and  expenses  for  this  farm 
are  itemized  in  table  23. 


76  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

TABLE  23 

Keceipts  and  Expenditures  on  a  30-Acre  General  Farm  in  California 
for  the  Year  1925 

RECEIPTS  1925 

Crops  sold $315.77 

Cows 138.00 

Hogs 622.00 

Dairy  products 1,085.00 

Poultry  and  eggs 611.18 

Turkeys 325.00 

$3,096.95 
EXPENSES  1925 

Irrigation-district  taxes* $212.89 

County  taxes 90.35 

Interest  on  personal  loan* 111.94 

Labor 214.85 

Life-insurance  premium* 166.44 

Food,  clothing,  and  general  household  expenses 523.31 

Doctor  bills 176.73 

Books  and  lodge  dues 58.42 

Grain  feed 547.13 

Total $2,102.06 

Deduct  interest  and  part  of  life  insurance* 351.06 

$1,751.00 

*  In  order  to  determine  actual  capital  available  for  repayment  of  development  costs  and  interest, 
that  part  of  the  irrigation  tax  paid  for  interest  and  also  interest  on  the  personal  loan  should  be  deducted. 
Since  life  insurance  represents  in  part  an  expense  and  in  part  a  capital  investment,  only  that  part  which 
may  be  considered  an  expense  should  be  included  in  the  expense  items  to  be  deducted  from  gross  income 
to  determine  the  amount  available  for  amortization  and  interest  payments.  Value  of  the  farmer's  labor 
and  depreciation  are  omitted  because  the  object  is  to  determine  the  amount  of  capital  available  and  not 
the  net  farm  income.  Depreciation  is  a  charge  which  will  eventually  have  to  be  paid  but  will  not 
become  important  during  the  period  of  debt  amortization. 

What  the  income  and  expenditures  exclusive  of  interest  and  the 
value  of  the  farmer's  own  labor,  would  have  been  for  the  years  1914 
to  1925  inclusive  are  shown  on  the  left  side  of  figure  15.  The  amount 
available  for  interest  and  principal  payments  is  the  difference  between 
these  two  curves.  This  farmer  has  been  very  successful.  He  purchased 
his  land  in  1913,  but  did  not  improve  it  until  1919  when  he  moved  to 
the  farm.  The  cash  outlay  for  development,  including  buildings,  farm 
equipment,  and  livestock,  amounted  to  $5,940.  This  does  not  include 
the  owner's  labor  or  interest  on  the  capital.  These  improvements  in 
1914  would  have  cost  $3,517;  in  1920,  $6,891;  and  in  1925,  $5,112, 
which  is  45.4  per  cent  larger  than  1914.  In  May,  1919,  this  farmer 
had  a  net  worth  of  $5,787.  His  financial  progress  is  shown  in  table  24, 
which  gives  his  net  worth  at  different  times  since  1919. 

Figures  16,  17,  18,  and  19  are  other  cases  which  have  been  studied 
in  the  same  way,  and  are  shown  here  to  illustrate  the  variation  in 
the  ability  of  different  farmers  working  under  different  conditions  to 
meet  interest  and  principal  payments  on  development  costs.     The 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


77 


Gross  Income,  Expenses,  and  Costs  of  Development  of  a  30-Acre  Irrigated 
California  Dairy,  Hog,  and  Poultry  Farm 


/ 

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rr     ie     is     zo     zi     zz    zs    **    zs 


Fig.  15. — This  chart  shows  the  gross  income,  expenses,  and  costs  of  develop- 
ment of  a  30-acre  irrigated  California  dairy,  hog,  and  poultry  farm  as  they 
would  have  been  with  prices  prevailing  in  the  years  1914-1925  inclusive,  had 
the  1925  program  been  carried  out  in  each  of  these  years.  The  farmer  who 
developed  in  1919  was  unfortunate  as  costs  of  development  were  very  high. 
This  is  an  example.  The  amount  of  money  available  in  1925  for  interest  and 
repayment  of  principal  expended  for  development  was  25  per  cent  greater  on 
this  farm  than  it  would  have  been  with  the  same  physical  output  in  1914,  while 
principal  and  interest  amount  to  about  double  what  would  have  been  the  case 
had  the  farm  been  developed  in  1914.  It  would  have  cost,  on  the  average,  in 
the  years  1923  to  1925,  inclusive,  47  per  cent  more  to  install  this  type  of 
development  than  it  would  have  cost  in  1914. 


TABLE  24 

Net  Worth  of  a  Farmer  in  the  San  Joaquin  Valley,  Showing  a  Gain  of 
More  than  $6,000  in  Seven  Years* 

Date  Net  worth 

May,  1919 $5,787 

Jan.  1,  1922 7,822 

Jan.,  1923 7,515 

Aug.  1,  1923 7,954 

Jan.  1,  1925 9,393 

Jan.,  1926 11,746 

April  1,  1926 12,308 

Original  net  worth,  1919 5,787 

Increase  in  net  worth,  1919-1926 $6,521 

*  This  farmer's  net  worth  should  be  decreased  $1,000  to  correct  for  decrease  in  values  used  in 
appraisal  of  farm  property  during  the  years  1922  to  1926  inclusive.  With  this  correction,  the  figures 
show  that  good  progress  has  been  made. 


80 


UNIVEESITY    OF    CALIFORNIA EXPERIMENT    STATION 


were  applied  to  the  same  farm  operations,  that  is,  to  the  same  items 
of  income  and  expense,  these  farms  having  different  combinations  of 
enterprises  showed  different  earning  power.  The  amount  available  for 
principal  payment  from  some  combinations  of  enterprises  increased, 


Gross  Income,  Expenses  Exclusive  of  Interest,  and  Costs  of  Development 
of  a  30-Acre  Irrigated  California  General  Farm 


4Z50 

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3750 
3500 

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,  Expense   Exclusive  of 
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—  Cost    of   Land  Leveling 
Buildings ,   Farm  Equipment; 

450O 
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■ 1                     1 1 1           1     '      1            1 

Fig.  19. — On  this  farm  either  the  father  or  son  worked  out  while  the  other 
took  care  of  the  farm.  This  is  a  common  procedure.  The  gross  income  includes 
this  outside  labor.  The  diagram  to  the  left  shows  what  this  gross  income  would 
have  been  in  any  of  the  years  from  1914  to  1925,  inclusive,  had  the  same  amount 
of  time  been  devoted  to  outside  work  and  had  the  same  physical  output  of  the 
farm  been  obtained  as  in  1922.  Under  the  type  of  management  of  this  farm, 
as  it  was  in  1925,  the  amount  available  for  principal  and  interest  was  90  per 
cent  greater  on  the  average  for  the  years  1923,  1924,  and  1925,  than  it  would 
have  been  in  1914  had  the  same  program  been  followed  then.  The  average  costs 
of  improving  such  a  farm  in  1923,  1924,  and  1925,  were  35  per  cent  greater  than 
they  would  have  been  for  the  same  type  of  farm  in  1914.  This  farm  was 
improved  in  1918  under  cost  conditions  very  similar  to  those  prevailing  in  these 
three  post-war  years.  This  farmer,  therefore,  is  working  under  conditions  of 
repayment  similar  to  what  might  be  expected  of  a  farmer  beginning  in  these 
later  years. 

while  for  others  it  decreased.  Different  items  of  expenditure  having 
different  relative  costs  result  in  combinations  which  vary  greatly. 
The  size  of  enterprise  also  affected  the  earning  power.  The  change 
in  conditions  from  pre-war  years  to  the  years  1923-1925  was  less 
favorable  to  the  owner  of  the  83-acre  dairy  farm  than  to  the  owner 
of  the  20-acre  dairy  farm,  as  shown  in  sections  1  and  5,  respectively, 


Bul.  435] 


AGRICULTURAL   DEVELOPMENT    AND    IRRIGATION 


81 


of  figure  20.  This  is  because  the  83-acre  farm  has  an  entirely  different 
schedule  of  expenditures.  The  contrast  is  greater,  however,  between  the 
12-acre  general  farm  shown  in  figure  16  and  section  3  of  figure  20,  and 
the  30-acre  general  farm  shown  in  figure  19  and  section  6  of  figure  20. 
Size  of  farm  is  not  the  only  factor  which  makes  the  relative  advantage 
for  repayment  of  development  cost  vary  with  different  enterprises. 
Soil  characteristics  may  alter  the  amount  of  labor  required  in  culti- 
vation and  irrigation.  The  ability  and  standard  of  living  of  the  farmer 
and  his  family  not  only  affect  the  income  and  expenditure  for  a  given 

TABLE  25 

Cost  of  Equipment,  Livestock,  and  Development,  Exclusive  of  Price  of  Land, 

Also  Amount  Available  for  Repayment  of  Principal  and  Interest 

on  Six  Typical  California  Farms,*  1914,  1920,  1925t 


Farm 

Size 

in 

acres 

Year 
devel- 
oped 

Equip- 
ment 
and 

develop- 
ment 
cost 

Equiva- 
lent 

M 

Pre-war 
equiva- 
lent 

Amount  available  for 

repayment  of  principal 

and  interest 

Percentage  of 

increase  1925  over 

1914 

No. 

1914 

1920 

1925 

Amount 
available 

for  re- 
payment 

Develop- 
ment 
cost 

1 

83 

1918 

$13,300 

$13,800 

$9,200 

$1,200 

$3,000 

$2,250 

87 

50 

2 

30 

1919 

6,000 

5,200 

3,400 

850 

1,750 

1,250 

47 

53 

3 

12 

1918 

3,250 

3,400 

2,300 

50 

250 

50 

0 

48 

4 

59 

Pre-war 

2,600 

3,750 

2,600 

0 

0 

0 

0 

44 

5 

20 

1918 

6,700 

6,850 

4,800 

500 

1,250 

1,100 

120 

43 

6 

30 

1918 

6,150 

6,250 

4,500 

760 

2,150 

1,600 

110 

39 

*  These  six  farms  were  operated  under  the  following  types  of  agriculture: 
1— Dairy. 

2 — Dairy,  hog  and  poultry. 
3 — Alfalfa,  hogs,  prunes. 

4— Dairy  and  peaches,  irrigated,  16  acres;  grain,  dry-farmed,  43  acres. 
5 — Dairy. 

6 — Alfalfa,  some  dairy,  and  outside  labor  as  janitor  in  school.    The  labor  is  included  in 

income. 

t  In  computing  equivalent  costs  in  1914,  1920  and  1925,  the  actual  costs  for  the  year  in  which  the 

farm  was  developed  were  adjusted  by  taking  into  account  changes  in  prices  and  wages  and  making 

estimates  based  upon  the  same  character  of  development  and  equipment  as  was  actually  installed. 

Amount  available  for  principal  and  interest  was  computed  in  the  same  way. 


period  of  time  when  compared  with  other  farms,  but  also  the  relative 
ability  to  repay  development  costs,  one  year  with  another,  is  affected 
by  such  factors.  This  is  because  each  particular  farm  has  a  com- 
bination of  a  large  number  of  fluctuating  items  of  income  and  expendi- 
ture. It  cannot  be  said,  therefore,  without  investigating  each  case  on 
its  own  merits,  that  it  is  more  advantageous,  or  less  so,  to  develop  land 
since  1922  than  it  was  before  the  war. 

A  further  complication  arises  in  connection  with  all  of  the  illus- 
trations used  in  this  analysis.  Although  many  farms  are  developed 
for  the  express  purpose  of  producing  a  fixed  combination  of  products, 


80 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


were  applied  to  the  same  farm  operations,  that  is,  to  the  same  items 
of  income  and  expense,  these  farms  having  different  combinations  of 
enterprises  showed  different  earning  power.  The  amount  available  for 
principal  payment  from  some  combinations  of  enterprises  increased, 


Gross  Income,  Expenses  Exclusive  of  Interest,  and  Costs  of  Development 
of  a  30-Acre  Irrigated  California  General  Farm 


/ 

1 

\ 

3750 
3BOO 

i 

/ 

\ 

\ 

6ros 

s  Irn 

Oma 

-i 

\ 
\ 

i 
f 

\ 
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t 

\ 

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i 

Si 

/ 

t 

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t 

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1 
1 

,  Expense   Exclusive  of 
[interest  *-  Owners  Labor 

\   2000 

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150O 

1 

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IOOO 
750 
SOO 
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3000 
7750 
7500 
7ZSO 
7O00 

yl 

/ 

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6500 

\ 

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\ 

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0000 

\ 

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5Z50 

~~Cost    erf   Land  Leveling 
Buildings ,   Form  Equipment, 

A50O 

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—y 

1914-     15      *6 


Z3      X4.      Z5 


Fig.  19. — On  this  farm  either  the  father  or  son  worked  out  while  the  other 
took  care  of  the  farm.  This  is  a  common  procedure.  The  gross  income  includes 
this  outside  labor.  The  diagram  to  the  left  shows  what  this  gross  income  would 
have  been  in  any  of  the  years  from  1914  to  1925,  inclusive,  had  the  same  amount 
of  time  been  devoted  to  outside  work  and  had  the  same  physical  output  of  the 
farm  been  obtained  as  in  1922.  Under  the  type  of  management  of  this  farm, 
as  it  was  in  1925,  the  amount  available  for  principal  and  interest  was  90  per 
cent  greater  on  the  average  for  the  years  1923,  1924,  and  1925,  than  it  would 
have  been  in  1914  had  the  same  program  been  followed  then.  The  average  costs 
of  improving  such  a  farm  in  1923,  1924,  and  1925,  were  35  per  cent  greater  than 
they  would  have  been  for  the  same  type  of  farm  in  1914.  This  farm  was 
improved  in  1918  under  cost  conditions  very  similar  to  those  prevailing  in  these 
three  post-war  years.  This  farmer,  therefore,  is  working  under  conditions  of 
repayment  similar  to  what  might  be  expected  of  a  farmer  beginning  in  these 
later  years. 

while  for  others  it  decreased.  Different  items  of  expenditure  having 
different  relative  costs  result  in  combinations  which  vary  greatly. 
The  size  of  enterprise  also  affected  the  earning  power.  The  change 
in  conditions  from  pre-war  years  to  the  years  1923-1925  was  less 
favorable  to  the  owner  of  the  83-acre  dairy  farm  than  to  the  owner 
of  the  20-acre  dairy  farm,  as  shown  in  sections  1  and  5,  respectively, 


Bul.  435] 


AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION 


81 


of  figure  20.  This  is  because  the  83-acre  farm  has  an  entirely  different 
schedule  of  expenditures.  The  contrast  is  greater,  however,  between  the 
12-acre  general  farm  shown  in  figure  16  and  section  3  of  figure  20,  and 
the  30-acre  general  farm  shown  in  figure  19  and  section  6  of  figure  20. 
Size  of  farm  is  not  the  only  factor  which  makes  the  relative  advantage 
for  repayment  of  development  cost  vary  with  different  enterprises. 
Soil  characteristics  may  alter  the  amount  of  labor  required  in  culti- 
vation and  irrigation.  The  ability  and  standard  of  living  of  the  farmer 
and  his  family  not  only  affect  the  income  and  expenditure  for  a  given 

TABLE  25 

Cost  of  Equipment,  Livestock,  and  Development,  Exclusive  of  Price  of  Land, 

Also  Amount  Available  for  Eepayment  of  Principal  and  Interest 

on  Six  Typical  California  Farms,*  1914,  1920,  1925  + 


Farm 

Size 

in 

acres 

Year 
devel- 
oped 

Equip- 
ment 
and 

develop- 
ment 
cost 

Equiva- 
lent 

Pre-war 
equiva- 
lent 

Amount  available  for 

repayment  of  principal 

and  interest 

Percentage  of 

increase  1925  over 

1914 

No. 

1914 

1920 

1925 

Amount 
available 

for  re- 
payment 

Develop- 
ment 
cost 

1 

83 

1918 

$13,300 

$13,800 

$9,200 

$1,200 

$3,000 

$2,250 

87 

50 

2 

30 

1919 

6,000 

5,200 

3,400 

850 

1,750 

1,250 

47 

53 

3 

12 

1918 

3,250 

3,400 

2,300 

50 

250 

50 

0 

48 

4 

59 

Pre-war 

2,600 

3,750 

2,600 

0 

0 

0 

0 

44 

5 

20 

1918 

6,700 

6,850 

4,800 

500 

1,250 

1,100 

120 

43 

6 

30 

1918 

6,150 

6,250 

4,500 

760 

2,150 

1,600 

110 

39 

*  These  six  farms  were  operated  under  the  following  types  of  agriculture: 
1— Dairy. 

2 — Dairy,  hog  and  poultry. 
3— Alfalfa,  hogs,  prunes. 

4 — Dairy  and  peaches,  irrigated,  16  acres;  grain,  dry-farmed,  43  acres. 
5 — Dairy. 

6 — Alfalfa,  some  dairy,  and  outside  labor  as  janitor  in  school.    The  labor  is  included  in 

income. 

t  In  computing  equivalent  costs  in  1914,  1920  and  1925,  the  actual  costs  for  the  year  in  which  the 

farm  was  developed  were  adjusted  by  taking  into  account  changes  in  prices  and  wages  and  making 

estimates  based  upon  the  same  character  of  development  and  equipment  as  was  actually  installed. 

Amount  available  for  principal  and  interest  was  computed  in  the  same  way. 


period  of  time  when  compared  with  other  farms,  but  also  the  relative 
ability  to  repay  development  costs,  one  year  with  another,  is  affected 
by  such  factors.  This  is  because  each  particular  farm  has  a  com- 
bination of  a  large  number  of  fluctuating  items  of  income  and  expendi- 
ture. It  cannot  be  said,  therefore,  without  investigating  each  case  on 
its  own  merits,  that  it  is  more  advantageous,  or  less  so,  to  develop  land 
since  1922  than  it  was  before  the  war. 

A  further  complication  arises  in  connection  with  all  of  the  illus- 
trations used  in  this  analysis.  Although  many  farms  are  developed 
for  the  express  purpose  of  producing  a  fixed  combination  of  products, 


82 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


many  change  their  schedules  of  production  and  expenditure  from 
year  to  year.  In  hard  times,  expenses  are  curtailed  and  work  is  either 
done  more  efficiently  or  credit  is  used  to  carry  the  farm  through  the 
difficult  time.     Buildings  and  equipment  are  allowed  to  depreciate 

Amounts  which  Would  Have  Been  Available  for  Eepayment  of  Principal 
and  Interest  on  Six  California  Farms  from  1914  to  1925,  Inclusive,  Had 
the  Prevailing  Prices  in  those  Years  Been  Paid  and  Eeceived  for 
Products  Bought  and  Sold 


3000 

J 

tsoo 

ZZ50 

\. 

Qizso 

MOO 

750 

19 
600 

i  o 

-Z50 

(4      IS       /6       rr       IB       19      ZO      Zl      ZZ      Z3      Z4      z 

5 

s 

■^ 

i 

V 

/ 

N 

/ 

± 

1914        15         16         17        Iff         19        ZO       Zl        £Z       Z3       Z4      Z 

5 

5 

IBOO 

-5 

^1000 

Z0O 

3000 

Z 

1750 

^ 

IOOO 
750 
500 

Zl      ZZ      Z3      Z4      ZS 


IO        ZO        Zl         ZZ      *Z3       Z4       Z5 


Fig.  20. — Chart  1  in  figure  20  is  the  same  farm  illustrated  in  figure  14;  chart 
2  corresponds  to  figure  15;  chart  3  to  figure  16;  chart  4  to  figure  17;  chart  5  to 
figure  18,  and  chart  6  to  figure  19. 

without  repair  or  replacement.  Crops  may  be  changed  to  those  which 
are  expected  to  produce  larger  incomes.  This  general  tendency  toward 
readjustment  from  year  to  year  does  not  detract  from  the  results  of 
this  analysis  which  shows  that  for  a  given  combination  of  enterprises 


BuL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION 


83 


and  for  a  fixed  proportion  of  the  factors  of  production,  land,  labor, 
and  capital,  there  is  a  change  from  year  to  year  in  the  amount  avail- 
able for  the  repayment  of  development  costs  and  interest  on  capital 
invested  as  a  result  of  the  price  change.  This  change  is  relatively 
different  for  different  combinations,  even  though  the  crops  produced 
may  be  the  same. 

The  right  half  of  each  of  figures  14  to  19,  inclusive,  relating  to  the 
costs  of  farm  development,  shows  that  the  farmer  who  bought  and 
developed  his  farm  in  any  year  prior  to  1919  made  improvements 

Belative  Cost  of  Development,  Acres  Included  in  New  Land  Contracts, 
Amount  of  Improvement,  Loans  and  Belative  Prices  of  Butterfat  in 
Durham  State  Land  Settlement  During  the  Period  of  Development 


AcrwsHues 

/ 

+ 

/ 

\ 

m   C« 

/ 

^Cos-t  a 

*  Oave/a 

omen-f 

/ 

/ 

\ 

t       * 

// 

\\ 

Acres 
Land  C 

includea 
"ontracf-i 

in  A/svj 
Each  Y* 

tr^"       \ 

// 

\\ 

/   / 
// 

\\ 

V  '. 

\\ 

«  \„ 

\     / 

i 

\\ 



l    \ 

\ 

\ 

r  r 

Al 

<-l An- 

•f-o 

Sett/er- 

•   Loans 
r  for 

k    — i -*~ 

-^^ 

*m\m 

1        / 

*    V 

f    I.- 

Im 

oroveme 

n+s 

\ 

\ 

^  e   C\.  mo 

5 

/ 

A 

\ 
\ 

/»    \ 

\ 

\ 

\ 

■$ 

/Rela+ 

HtH-fo-Y- 

'     / 

1     .♦•'"' 

'  '     \ 

\ 

*r* 

v- 

+    $mo 

?* 

y 

l.^ 

/..-' 

S 

/ 

/ 

\ 
\ 

j>"^ 



■— — - 

V 

/ 

/ 

r 

s         \ 

.^ 

Fig.  21. — Development  costs  in  the  Durham  Land  Settlement  were  high  at 
the  time  a  large  portion  of  farms  were  improved.  Declining  prices  of  butterfat 
resulted  in  small  incomes  for  the  repayment  of  these  costs. 

under  conditions  of  cost  which  were  as  good  or  better  than  those  which 
confronted  the  farmer  making  improvements  in  1923,  1924,  and  1925. 
The  farmer  developing  prior  to  1918  had  the  added  advantage  of  an 
increased  ability  to  make  repayment  of  costs  during  the  years  1918, 
1919,  and  1920,  due  to  high  prices  for  commodities  sold. 

Farmers  purchasing  farms  and  improving  them  in  1919  and  1920 
are  unfortunate  and  will  be  compelled  to  write  off  some  part  of  their 
invested  capital  from  their  assets. 

These  figures  show  the  effect  of  changing  prices  upon  the  cost  of 
farm  development.     In  considering  the  relative  income  available  to 


84  UNIVERSITY   OF    CALIFORNIA EXPERIMENT    STATION 

repay  these  costs  from  farming  during  the  period  of  1914  to  1925  the 
relative  purchasing  power  of  the  farmer 's  dollar  should  be  considered. 

The  relation  of  price  change  to  the  development  in  the  Durham 
Land  Settlement  colony  comprising  many  farms  is  shown  in  figure  21. 
Land  sales  which  began  in  1918  were  larger  that  year  than  in  any 
year  since.  Most  of  these  farms  were  improved  between  1918  and 
1921  when  prices  were  high,  as  evidenced  by  the  loans  that  were  made 
to  farmers.  The  relative  cost  of  developing  land  and  the  relative 
price  of  butterfat  are  shown  for  the  period  1913  to  1925,  inclusive. 
Expenditures  for  most  of  the  farm  improvements  were  made  while 
costs  were  high  and  repayment  on  loans  made  for  these  improvements 
is  being  made  under  much  less  favorable  prices  for  butterfat  than 
prevailed  during  the  early  development  period.  Notwithstanding  this 
handicap,  the  relatively  larger  costs  of  production  and  the  fact  that 
the  lands  probably  were  not  producing  to  capacity  until  farm  prices 
had  dropped,  the  average  net  worth  of  the  settler  increased  nearly 
$3,000  from  1919  to  1924. 

Overproduction. — There  is  a  tendency  in  business  towards  alternate 
periods  of  over  and  underproduction.  This  results  in  what  is  known 
as  the  business  cycle.  These  alternate  periods  of  prosperity  and 
depression  do  not  occur  at  regular  intervals  and  vary  widely  in 
magnitude,  but  they  cause  the  alternate  rise  and  fall  of  prices.  These 
changes  are  important  enough  to  be  observed  by  the  business  man  and 
consequently  should  be  by  the  farmer  contemplating  the  development 
of  land  or  by  groups  considering  project  construction.  There  is  also 
a  tendency  towards  periods  of  over  and  underproduction  of  different 
agricultural  crops,  and  although  the  importance  of  agriculture  in 
causing  the  general  business  cycle  is  not  thoroughly  understood,  for 
authorities  differ  on  this  subject,  still  the  effect  upon  local  business 
is  great.  Farm  profits  are  reduced,  causing  smaller  purchasing  power 
of  the  growers.  Overproduction  of  annual  crops  usually  results  in 
adjustment  of  production  the  following  year.  For  fruit  crops,  periods 
of  overproduction  are  much  more  serious  because  it  requires  many 
years  in  which  to  alter  the  production. 

Overproduction  is  related  to  the  analysis  of  retarded  agricultural 
development  inasmuch  as  lower  prices  resulting  from  overproduction 
may  directly  affect  farm  values  and  the  earning  power  of  the  farm 
purchaser. 

The  increase  in  population  and  growth  of  agricultural  production 
in  California  has  been  much  more  rapid  relatively  than  that  of  the 
United  States  as  a  whole.    The  increase  in  agricultural  production  has 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  85 

in  both  cases  closely  paralleled  the  increase  in  population.  California 's 
principal  agricultural  income  is  derived  from  certain  high-priced 
crops  marketed  principally  in  the  United  States,  though  some  are 
exported  in  large  quantities.  Per  capita  consumption  of  some  of  these 
specialties  has  been  increased  through  good  marketing  and  advertis- 
ing. Although  there  has  been  an  actual  per  capita  increase  in  the 
United  States  production  of  crops  important  in  California  agriculture, 
this  is  not  in  itself  proof  of  overproduction.  This  tendency,  however, 
cannot  be  continued  indefinitely  without  reducing  the  present  rate  of 
profit  in  certain  of  these  agricultural  industries. 

Overproduction  is  a  relative  term  applied  to  an  industry  when  the 
rate  of  profit  is  so  low  that  many  are  producing  at  a  loss.  It  is  difficult 
to  determine  just  where  overproduction  begins.  A  change  in  price 
may  greatly  alter  the  margin  of  profitable  farming  for  a  particular 
commodity.  When,  however,  the  price  remains  for  a  long  time  so  low 
that  a  large  proportion  of  the  producers  are  farming  at  a  loss,  over- 
production is  usually  given  as  the  cause. 

It  has  been  shown  that  under  post-war  conditions  some  farmers  are 
developing  farms  at  a  profit  and  are  receiving  good  remuneration  for 
their  work.  Because  of  the  changing  volume  of  production,  crop 
prices  vary  from  year  to  year.  These  changes  shift  the  margin  of 
profitable  farming  up  or  down  with  changing  prices.  There  is  always 
room  for  capable  farmers.  In  all  lines  of  business  many  must  fail. 
When  the  percentage  of  failures  becomes  large,  they  are  usually 
attributed  to  overproduction.  It  may  throw  some  light  upon  this 
question  to  observe  the  trend  of  production  in  the  United  States  and 
in  California  during  the  past  few  decades. 

Although  prices  have  fluctuated  greatly,  the  volume  of  agricultural 
production  in  the  United  States  has  shown  a  uniform  trend.  The 
Harvard  Committee  of  Economic  Research  has  constructed  an  index 
of  agricultural  production  for  the  United  States  from  1879  to  1924. 
Its  first  series,  from  1879  to  1920,  used  a  few  crops  which  differed 
from  those  of  the  second  series,  which  covered  the  period  from  1899 
to  1924,  but  there  is  little  variation  between  the  two  series.  Both  show 
a  change  in  trend  about  1910.  Figure  22  shows  this  index  of  pro- 
duction from  1897  to  1924. 

Although  many  of  the  crops  produced  in  other  parts  of  the  United 
States  are  important  in  California  production,  in  many  instances, 
California  crops  are  not  important  in  the  production  of  other  states. 
For  this  reason  California  crop  production  has  certain  peculiar 
characteristics  of  its  own. 


86 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Index  of  United  States  Production  of  Crops  which  Constitute  a  Major 

Part  of  the  Value  of  Agricultural  Products  of  the 

United  States,  1897-1924 


130 


no 

X 

\ 

^  90 

S 

^   70 


SO 


/89T    /900 


/905 


I9SO 


1915 


f9ZO 


I9Z4 


Fig.  22. — Day's  unadjusted  index  of  agricultural  production  (Day,  Edmund 
E.  An  index  of  the  physical  volume  of  production.  The  Eeview  of  Economic 
Statistics  and  Supplements  preliminary  series  2:246.  1920),  being  on  the  base 
1879,  was  divided  through  by  201.7,  the  index  for  1909,  to  put  it  on  1909  as  a 
base.  A  trend  was  then  fitted  to  the  series,  by  the  method  of  least  squares,  the 
equation  being  Y  =  95.2  -f  1.7X  with  the  origin  at  1909. 

The  series  of  Ada  Mathews  (Mathews,  Ada  M.  The  physical  volume  of  pro- 
duction in  the  United  States  for  1924.  The  Eeview  of  Economic  Statistics  7:208. 
1925)  covering  the  period  1899-1924,  having  1899  as  a  base,  was  divided  through 
by  118,  the  index  for  1909,  thus  placing  this  series  on  1909  as  a  base.  The  trend 
for  this  series  is  Y=  111.5  -f-  1.12Z".     This  trend  was  then  applied  to  the  series. 

The  chart  was  obtained  by  using  the  first  series  for  the  period  1897-1910,  and 
the  second  for  the  period  1910-1924.  The  trends  were  placed  with  their 
respective  series  and  joined  at  1910. 

Of  the  California  grain  crop,  1,161,000  acres  in  1924  were  wheat, 
oats,  and  barley,  and  of  the  hay  crop,  905,000  acres  were  grain  hay, 
practically  all  of  which  was  dry-farmed.  If  the  acreage  devoted  to 
these  two  crops,  2,066,000  acres,  which  were  principally  dry-farm 
crops,  be  deducted  from  the  total  crop  acreage  of  the  state,  there  were 
3,505,600  acres  remaining,  very  nearly  all  of  which  were  irrigated.  Of 
the  fruit  acreage,  only  79  per  cent,  or  1,181,984  acres  was  in  bearing. 


Bul.  435] 


AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION 


87 


Table  26  shows  the  extent  to  which  the  character  of  California 
production  differs  from  that  of  the  United  States.  The  fruit  crop 
is  46.7  per  cent  of  the  total  crop  value,  the  vegetables  10.8  per  cent, 
and  the  field  crop  42.5  per  cent.  These  percentages  are  very  different 
from  those  which  apply  to  the  total  crop  production  of  the  United 
States.  In  1924  fruits  constituted  4.7  per  cent  of  the  total  value  of 
all  crops,  vegetables  2.9  per  cent,  and  the  field  crops  92.4  per  cent. 

TABLE  26 

The  Characteristics  of  Agricultural  Production  in  California  as  Compared 
with  that  of  the  united  states,  1924 


California 
acreage 

California  crop  value 

United  States  crop  value 

Crops 

Value* 

Percentage 

of  total 

California 

value 

Value* 

Percentage 

of  total 

United  States 

value 

5,571,600 

3,981,200 

l,369,600t 

220,800 

$437,755,000 

185,822,000 

204,869,000 

47,064,000 

100.0 
42.5 
46.7 
10.8 

$9,182,501,000 

8,480,301,000 

433,515,000 

286,685,000 

100  0 

Field  crops 

Fruits  and  vines 

92.4 
4.7 
2.9 

*  United  States  Department  of  Agriculture.    Agriculture  yearbook  1925:1356-57.     1926. 

t  Bearing  acreage. 

t  Kaufman,  E.  D.    California  crop  report  for  1925.    California  Dept.  Agr.  Spec.  Pub.  63:32.     1926. 

Production  in  the  United  States  of  crops  constituting  a  major  part 
of  California's  crop  value  has  increased  much  more  rapidly  for  many 
years  than  has  the  production  of  crops  constituting  the  major  part  of 
the  crop  value  for  the  whole  United  States.  In  other  words,  the  United 
States'  production  of  California's  major  crops  has  increased  much 
more  rapidly  than  United  States'  production  of  those  crops  most 
important  to  the  United  States  as  a  whole.  The  rate  at  which  this 
rapid  production  of  California  crops  has  taken  place  is  very  striking. 
Figure  23  shows  the  trend  of  United  States'  production  of  farm 
commodities  which  constitute  68  per  cent  of  the  total  California  crop 
value.  The  comparison  can  be  seen  in  figure  24,  which  is  a  composite 
of  the  trends  shown  in  figures  22  and  23,  and,  in  addition,  trends  of 
increase  in  population  for  California  and  for  the  United  States  are 
shown. 

In  1925  the  agricultural  production  of  the  United  States  was  16 
per  cent  greater  than  in  1910,  while  the  population  was  25  per  cent 
greater.  The  increase  in  United  States'  population  paralleled  agri- 
cultural production  to  1910,  and  since  then  has  increased  faster  than 
the  United  States'  agricultural  production,  but  United  States'  pro- 
duction of  the  principal  crops  of  California  has  increased  much  faster 


88 


UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


than  the  population  of  the  United  States.  Since  these  products  are 
sold  principally  to  the  people  of  the  entire  United  States,  there  is  a 
possibility  that  the  trend  is  towards  overproduction  of  the  crops  in 
which  California  producers  are  most  interested. 


Index  of  United  States  Production  of  Farm  Commodities  which  Constitute 
68  Per  Cent  of  the  Total  California  Crop  Value 


/ZO 


J905 


1910 


/9/5 


I9ZO 


I9ZS 


Fig.  23. — United  States  production  of  each  crop  was  expressed  as  a  ratio  of 
the  1919  and  1920  production.  These  relatives  were  then  averaged  by  taking  a 
weighted  geometric  mean  of  these  ratios,  the  weights  being  the  average  value 
of  these  crops  in  California  for  1919  to  1923,  inclusive.  The  equation  of  the 
line  of  trend  is:  T  =  53.9  +  2.5X.  The  crops  used,  which  constituted  68  per  cent 
of  the  total  value  of  California  crops,  are  given  in  table  27. 

The  discussion  has  not  taken  into  account  export  trade,  hold-over 
of  certain  products  from  year  to  year,  nor  prices,  all  of  which  are  very 
important  in  relation  to  the  problem  of  overproduction.  The  establish- 
ment of  new  and  better  markets  for  many  of  these  crops  is  also  a 
matter  of  great  importance  and  undoubtedly  accounts  for  much  of 


Bul.  435] 


AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION 


89 


the  increase  of  per-capita  production  The  index  numbers  of  the  United 
States'  production  of  the  principal  crops  of  California  include  wheat, 
barley,   oats,   corn,   tame   hay,   rice,   white   potatoes,   cotton,   apples, 

Trend  of  United  States  Production  of  Agricultural  Products  of  Importance 

in  the  United  States  as  a  Whole  and  of  Products  of  Importance  to 

California  Showing  Relation  to  Population  Growth 

1910  »  100 


ISO 


I 


\/oo 

I 


1 


50 


Tr&ncf    of    C'.S. 


Trend 


of  Cbfifot"77ta  SbpufaHctr 


7P 


* 


y- 


y 


/90S 


I9fO 


/9/5 


19ZO 


19Z5 


Fig.  24. — In  order  to  facilitate  comparison,  these  trends  were  all  converted 
to  the  same  basis,  1910. 


peaches,  prunes,  raisins,  oranges,  lemons,  and  walnuts.  The  United 
States  is  exporting  large  quantities  of  grain.  California  has  produced 
and  is  still  producing  a  large  amount  of  dry-farmed  grain,  but  the 


90  UNIVERSITY   OF    CALIFORNIA EXPERIMENT    STATION 

acreage  is  decreasing  as  new  land  is  brought  under  irrigation.  Corn 
and  hay  are  fed  here,  and  practically  no  livestock  or  dairy  products 
are  shipped  out  of  the  state.  The  rice  is  marketed  on  the  Pacific  Coast 
and  in  the  Orient. 

TABLE  27 

Weights  Used  in  the  Index  of  United  States  Production  of  Crops  which 
Are  of  Major  Importance  in  California 

Farm  value  Dec.  1 
Crop  average  of  5-year        Percentage 

period,  1919-23,  incl.*       of  total 

Wheat $19,271,400  6.20 

Barley 25,559,800  8.23 

Corn 5,235,800  1.69 

Oats 3,251,800  1.05 

Rice 11,561,600  3. 72 

Tame  hay 77,800,800  25.06 

Cotton  (fibre) 14,303,000  4.61 

Cotton  seed 1,793,600  .  58 

White  potatoes 12,018,800  3.87 

Sweet  potatoes 1,283,200  0.41 

Apples 8,733,600  2.81 

Peaches 18,750,000  6.04 

Prunes 16,288,600  5.24 

Raisins 30,263,000  9. 74 

Oranges 43,014,000  13.85 

Lemons 11,156,000  3.59 

Walnuts 10,275,000  3.31 

Total $310,560,000  100.00 

*  Kaufman,  E.  E.,  R.  E.  Blair,  and  N.  I.  Nielsen.    California  crop  report  for  1924.    California  Dept. 
Agr.  Spec.  Pub.  55:10-11,  16-17.     1925. 

In  those  localities  where  potatoes  and  cotton  are  grown,  there  is  a 
wide  diversification  of  crop  production  so  that  other  things  can  be 
substituted,  should  it  become  unprofitable  to  grow  these  crops.25  The 
situation  is  different  for  the  fruit  crops.  It  requires  several  years  for 
an  orchard  to  come  into  bearing  and  the  trees  then  producing  represent 
a  large  investment  of  capital.  The  fruit  acreage  in  1924  was  40  per 
cent  of  the  irrigated  area  of  the  state  and  the  value  of  the  fruit  crop 
was  45.3  per  cent  of  the  total  value  of  all  crops.  Seventy -nine  per  cent 
of  the  acreage  was  bearing.  Some  crops  come  into  bearing  slowly  so 
thai  if  no  more  plantings  arc  made  the  state  production  will  increase 
for  some  time  to  come.  The  United  States  is  exporting  apples,  prunes, 
peaches,  oranges,  and  raisins,  and  is  importing  lemons,  figs,  and  nuts. 
By  advertising  and  better  marketing,  the  domestic  per-capita  con- 
sumption of  certain  fruit  crops  has  been  greatly  increased.  Efficient 
advertising  and  market  development  may  increase  foreign  consump- 
tion.   Because  of  the  time  and  the  capital  required  to  produce  bearing 

25  Kaufman,  E.  E.,  E.  E.  Blair,  and  N.  I.  Nielsen.     California  crop  report 
1923.    California  Dept.  Agr.  Spec.  Pub.  43:1-31.     1924. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  91 

orchards,  the  determination  of  trends  of  production  is  highly  essential 
to  safeguard  the  fruit  industry.  But  to  analyze  the  situation,  the 
trend  of  production  of  these  crops  must  be  studied  with  reference  to 
trends  in  domestic  consumption  and  in  export  trade.  The  trend  of 
production  as  a  whole  may  be  very  different  from  that  of  specific  crops. 

The  preceding  discussion  has  shown  that  in  California  there  is  a 
large  supply  of  good  land  with  ample  water  supply  and  irrigation 
equipment  installed  which  is  awaiting  development.  Also  there  is  a 
large  amount  of  irrigated  land  that  requires  further  improvement 
before  it  can  become  profitable.  The  development  of  this  available 
land  in  the  most  economic  way  will  require  a  study  of  individual  crops 
as  to  their  trend  of  production,  price,  and  markets.  The  fruit  acreage, 
now  approximately  40  per  cent  of  the  irrigated  area,  has  been  increas- 
ing steadily.  There  appears  to  be  some  possibility  that  it  will  be 
difficult  to  maintain  this  increasing  trend  with  profit,  especially  in 
regard  to  some  fruits.  The  need  for  more  data  regarding  the  future 
of  specific  agricultural  industries  is  apparent.  Although  it  is  difficult 
to  determine  what  the  future  of  these  industries  may  be,  it  is  very 
hazardous  to  embark  in  any  industry  without  carefully  surveying  the 
field  and  reaching  some  definite  conclusions  regarding  the  future  out- 
look. Those  who  are  interested  in  the  development  of  any  new 
irrigation  enterprise  should  devote  much  attention  to  an  agricultural 
program  based  upon  a  study  of  crops  which  are  not  only  capable  of 
being  grown,  but  for  which  the  economic  outlook  is  favorable  during 
the  years  the  project  is  becoming  established.  Most  economists  agree 
that  there  is  no  possibility  of  general  overproduction.  That  there  may 
be  overproduction  in  one  or  a  group  of  industries  is  admitted,  and  this 
may  be  one  of  the  causes  which  is  keeping  capital  and  settlers  from  the 
improvement  of  more  than  a  million  acres  of  California  irrigated 
lands. 

It  should  be  recognized,  however,  if  overproduction  may  be  classed 
as  one  of  the  fundamental  causes  of  retarded  development,  that  it  is 
only  one  of  the  causes  and  probably  not  the  primary  cause ;  for  the  lag 
in  agricultural  development  behind  irrigation  development  is  char- 
acteristic of  the  past  history  of  irrigation  through  periods  of  pros- 
perity and  periods  of  depression.  Overproduction  may  aggravate  the 
situation  at  certain  times.  A  study  of  crop  adaptation  from  an 
economic  as  well  as  a  physical  standpoint  should  help  in  the  solution 
of  this  problem.  It  is  still  possible  for  some  farmers  to  develop  farms 
and  obtain  attractive  remuneration  for  their  work. 


92  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 


Land  Qualities  Materially  Affect  the  Rate  of  Development 

Most  of  the  preceding'  discussion  has  been  devoted  to  the  economic 
causes  of  maladjustments  in  irrigation  and  agricultural  development. 
The  complete  discussion  of  the  physical  elements  related  to  this  same 
problem  would  lead  to  treatises  on  the  subjects  of  soils,  rainfall, 
quantity  and  quality  of  irrigation  supply,  temperature,  topography, 
and  effect  of  drainage  on  plant  growth.  Quality  of  land  depends  upon 
all  of  these  factors.  It  is  the  relation  of  these  physical  considerations 
to  the  economic  which  makes  necessary  a  brief  discussion  of  them  here. 
These  qualities  affecting  productivity  of  land  together  with  economic 
factors,  such  as  location,  available  markets,  and  transportation  facili- 
ties, vary  in  degree  and  are  combined  in  such  different  proportions  as 
to  make  every  farm  different  from  any  other  farm.    Farms  range  in 

TABLE  28 
Percentage  of  Unirrigable  Lands  Included  within  California 
Irrigation  Districts 


Per  cent  of 

of  districts 

unirrigable  land 

35 

0.0-  9.99 

10 

10.0-19.99 

8 

20.0-29.99 

4 

30.0-39.99 

productivity  from  meager  returns  to  very  abundant  yields,  while  the 
costs  of  obtaining  those  yields  vary  between  wide  extremes.  There  has 
been  included  in  California  irrigation  districts,  approximately  400,000 
acres  of  land  of  low  productivity,  the  cost  of  utilizing  which  would  be 
prohibitive.  In  addition  there  are  large  areas  which  have  been 
classified  as  irrigable  which  require  especially  large  amounts  of  labor 
and  capital  for  their  improvement.  It  is  difficult  to  draw  the  line 
definitely  between  irrigable  and  non-irrigable  lands.  It  requires  a 
study  of  all  of  the  elements  of  productivity  and  cost  of  utilization.  An 
approximation  to  the  situation  in  California  irrigation  districts  has 
been  made.  Table  28  shows  the  percentage  of  non-irrigable  land 
included  in  California  irrigation  districts.  Non-irrigable  lands  within 
irrigation  districts  are  a  liability,  and  too  often  shift  the  responsibility 
of  bond  amortization  to  the  better  lands.  Large  amounts  of  such  lands 
within  a  project  will  render  it  infeasible.  There  is  a  definite  relation 
between  the  quality  of  lands  within  a  project  and  the  rate  of  its 
development.  The  larger  the  percentage  of  good  lands  in  a  project, 
the  more  rapidly  it  will  develop.  "Good  land"  in  this  sense  would 
not  only  be  determined  by  soil  quality  but  by  all  of  the  physical  and 
economic  qualities  which  affect  net  returns. 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  93 


POLICIES  OF  IRRIGATION  AND  AGRICULTURAL 
DEVELOPMENT 

There  are  wide  differences  of  opinion  as  to  the  irrigation  and  agri- 
cultural policy  best  suited  to  the  development  of  the  west.  In  the  early 
history  of  California,  there  were  a  number  of  financial  failures  of 
private  capital  undertaking  the  construction  of  irrigation  works,  but 
for  the  past  twenty-five  years,  irrigation  development  has  been  success- 
fully financed  through  the  organization  of  irrigation  and  reclamation 
districts  in  which  the  lands  are  bonded  to  raise  capital  to  construct 
the  projects.  Through  experience  the  laws  have  been  perfected,  and 
able  supervision  has  been  given  to  most  of  the  projects  undertaken. 
Because  of  the  success  of  these  projects,  the  feeling,  generally,  is  that 
the  California  lands  to  be  irrigated  can  pay  for  their  own  construc- 
tion. The  large  projects  of  the  future  are  for  the  most  part  in  the 
Pacific  Coast  states  where  the  streams  are  larger  than  those  of  the 
intermountain  territory,  and  the  larger  the  projects,  the  more  the 
states  will  have  to  participate  in  the  development,  for  it  is  apparent 
that  ultimately  the  cost  of  projects  will  be  so  large  that  they  can  only 
be  constructed  by  the  state  or  federal  governments,  which  derive 
indirect  benefits  from  the  capital  invested. 

To  plan  and  carry  out  the  construction  of  one  of  the  large  irri- 
gation projects  now  being  considered  is  a  huge  undertaking,  but 
difficult  as  is  such  a  problem,  it  is  simpler  than  to  attempt  to  estimate 
construction  costs  and  rates  of  settlement  for  it ;  for  the  development 
extends  over  many  years,  and  no  control  is  exercised  over  land  settle- 
ment. In  the  latter  case  not  only  must  the  various  costs  be  estimated 
correctly,  but  the  trend  must  be  forecast  and  proper  allowance  made 
for  variations  that  are  uncontrollable,  such  as  the  rate  of  settlement, 
the  psychology  of  the  community,  and  the  development  of  agricultural 
industries  suited  to  the  locality. 

Successful  development  of  our  large  projects  will  depend  upon  the 
degree  to  which  the  problems  of  development  are  studied  and  accurate 
estimates  made  of  the  elements  of  cost  involved.  The  agricultural 
problems  and  economic  considerations  are  just  as  vital  to  the  success 
of  the  project  as  those  of  the  engineering  and  financing  of  the  project 
construction,  which  have  hitherto  received  most  of  the  consideration. 

The  difficulty  of  arriving  at  an  adequate  solution  of  agricultural 
development  problems  is  made  greater  by  the  conflicting  interests 


94  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

involved.  The  problem  of  coordinating  agricultural  and  irrigation 
development  is  a  complex  one.  The  ideal,  of  course,  would  be  to  have 
irrigation  projects  constructed  only  when  needed  with  prompt  settle- 
ment of  the  lands  included.  The  practical  carrying  out  of  this  ideal 
can  only  be  approached. 

It  is  not  proposed  here  to  outline  a  complete  irrigation  policy,  but 
to  suggest  possible  means  by  which  the  situation  revealed  by  this 
investigation  can  be  improved.  It  has  been  pointed  out  that  if  the 
lag  of  agricultural  development  can  be  remedied,  the  causes  must  be 
known  and  the  remedy  directed  at  these  causes.  In  outlining  a  policy, 
therefore,  that  will  tend  to  synchronize  agricultural  and  irrigation 
development,  the  causes  of  the  lag  of  agricultural  development  must 
form  the  basis.  It  seems  reasonable  that  such  a  policy  should  be 
directed  first  to  the  building  of  irrigation  projects  only  at  such  times 
as  economic  facts  indicate  that  they  are  needed.  Supplementing  this, 
a  constructive  and  conservative  land-settlement  policy  should  tend  to 
the  economical  and  rapid  development  of  lands  once  they  are  provided 
with  irrigation  facilities.  Any  policy  directed  at  improvement  will 
involve  the  cooperation  of  our  educational  institutions,  our  govern- 
mental bodies,  and  a  large  group  of  individuals  and  corporations 
interested  in  the  welfare  of  the  state. 


Policies  Should  Promote  the  Creation  of  Projects  When  in 
Greatest  Demand 

Placing  in  the  hands  of  land  development  companies,  state  irri- 
gation officials,  and  financial  institutions,  facts  concerning  the  ten- 
dency of  settlers  to  move  to  the  land  and  economic  forces  which  tend 
to  promote  irrigation  construction,  should  promote  construction  at 
times  when  the  completion  of  the  project  is  likely  to  coincide  with 
demand  for  irrigated  land.  State  and  government  officials,  legislative 
and  congressional  bodies,  engineers  and  holders  of  large  tracts  of  land 
should  be  supplied  with  more  information  concerning  the  relationships 
between  financial  conditions  and  their  effect  upon  irrigation  expansion 
and  land  settlement. 


BUL.  435]  AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION  95 


Education  Will  Curb  Unwise  Political  and  Booster  Propaganda 

Members  of  Congress  and  the  State  Legislature  are  in  need  of 
scientifically  analyzed  information  which  will  help  them  in  formulating 
their  policies.  Political  pressure  will  be  curbed  by  the  dissemination 
of  such  facts  as  are  required  for  a  true  concept  of  the  economic  prob- 
lems of  irrigation  and  agricultural  development.  Booster  organizations 
are  beginning  to  realize  that  propaganda  based  upon  other  than  facts 
leads  only  to  disappointment,  and  that  a  practical  program  of  develop- 
ment can  only  come  out  of  a  careful  study  of  the  true  situation  and  a 
knowledge  of  its  causes.  Speculators  can  harm  only  themselves  if  the 
prospective  clients  are  adequately  supplied  with  the  facts  concerning 
any  piece  of  land  being  exploited. 


Feasibility  Determinations 

An  effective  means  of  synchronizing  agricultural  and  irrigation 
development  would  be  the  compilation  and  dissemination  of  economic 
data  and,  what  is  more  important,  the  derivation  of  basic  principles 
by  the  use  of  which  feasibility  can  be  determined.  In  determining 
feasibility,  all  of  the  costs  which  enter  into  the  completely  developed 
farm  must  be  taken  into  account,  including  the  price  of  the  raw, 
unimproved  land,  the  cost  of  irrigation  construction,  the  cost  of 
delayed  agricultural  development,  and  the  cost  of  farm  land  improve- 
ment. Land  qualities,  including  all  of  the  physical  and  economic 
factors  that  effect  net  returns  should  be  given  the  most  careful  atten- 
tion. It  is  through  the  exclusion  of  lands  of  inferior  quality  that 
irrigation  expansion  can  be  kept  within  economic  limits. 

In  the  past,  many  errors  have  been  made  in  providing  expensive 
construction  for  lands  which,  when  improved,  would  not  justify  the 
expense  of  development.  Soils  often  vary  a  great  deal  in  the  same 
projects.  The  total  potential  value  of  all  of  the  soils  should  be  the 
basis  for  deciding  whether  the  project  should  or  should  not  be  built. 
The  feasibility  should  not  be  based  merely  upon  the  profit  anticipated 
from  the  best  soil.  If  the  project  is  justifiable  there  is  still  the  problem 
of  distributing  the  costs  of  construction  over  the  poorer  soils.  Many 
disappointments  have  been  caused  by  the  methods  of  distribution  of 
costs  that  were  not  expected  when  the  landowners  voted  to  undertake 
the  construction  of  the  project.  This  phase  of  irrigation  should  be 
turned  over  to  trained  agriculturists. 


94  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

involved.  The  problem  of  coordinating  agricultural  and  irrigation 
development  is  a  complex  one.  The  ideal,  of  course,  would  be  to  have 
irrigation  projects  constructed  only  when  needed  with  prompt  settle- 
ment of  the  lands  included.  The  practical  carrying  out  of  this  ideal 
can  only  be  approached. 

It  is  not  proposed  here  to  outline  a  complete  irrigation  policy,  but 
to  suggest  possible  means  by  which  the  situation  revealed  by  this 
investigation  can  be  improved.  It  has  been  pointed  out  that  if  the 
lag  of  agricultural  development  can  be  remedied,  the  causes  must  be 
known  and  the  remedy  directed  at  these  causes.  In  outlining  a  policy, 
therefore,  that  will  tend  to  synchronize  agricultural  and  irrigation 
development,  the  causes  of  the  lag  of  agricultural  development  must 
form  the  basis.  It  seems  reasonable  that  such  a  policy  should  be 
directed  first  to  the  building  of  irrigation  projects  only  at  such  times 
as  economic  facts  indicate  that  they  are  needed.  Supplementing  this, 
a  constructive  and  conservative  land-settlement  policy  should  tend  to 
the  economical  and  rapid  development  of  lands  once  they  are  provided 
with  irrigation  facilities.  Any  policy  directed  at  improvement  will 
involve  the  cooperation  of  our  educational  institutions,  our  govern- 
mental bodies,  and  a  large  group  of  individuals  and  corporations 
interested  in  the  welfare  of  the  state. 


Policies  Should  Promote  the  Creation  of  Projects  When  in 
Greatest  Demand 

Placing  in  the  hands  of  land  development  companies,  state  irri- 
gation officials,  and  financial  institutions,  facts  concerning  the  ten- 
dency of  settlers  to  move  to  the  land  and  economic  forces  which  tend 
to  promote  irrigation  construction,  should  promote  construction  at 
times  when  the  completion  of  the  project  is  likely  to  coincide  with 
demand  for  irrigated  land.  State  and  government  officials,  legislative 
and  congressional  bodies,  engineers  and  holders  of  large  tracts  of  land 
should  be  supplied  with  more  information  concerning  the  relationships 
between  financial  conditions  and  their  effect  upon  irrigation  expansion 
and  land  settlement. 


BUL.  435]  AGRICULTURAL    DEVELOPMENT    AND    IRRIGATION  95 


Education  Will  Curb  Unwise  Political  and  Booster  Propaganda 

Members  of  Congress  and  the  State  Legislature  are  in  need  of 
scientifically  analyzed  information  which  will  help  them  in  formulating 
their  policies.  Political  pressure  will  be  curbed  by  the  dissemination 
of  such  facts  as  are  required  for  a  true  concept  of  the  economic  prob- 
lems of  irrigation  and  agricultural  development.  Booster  organizations 
are  beginning  to  realize  that  propaganda  based  upon  other  than  facts 
leads  only  to  disappointment,  and  that  a  practical  program  of  develop- 
ment can  only  come  out  of  a  careful  study  of  the  true  situation  and  a 
knowledge  of  its  causes.  Speculators  can  harm  only  themselves  if  the 
prospective  clients  are  adequately  supplied  with  the  facts  concerning 
any  piece  of  land  being  exploited. 


Feasibility  Determinations 

An  effective  means  of  synchronizing  agricultural  and  irrigation 
development  would  be  the  compilation  and  dissemination  of  economic 
data  and,  what  is  more  important,  the  derivation  of  basic  principles 
by  the  use  of  which  feasibility  can  be  determined.  In  determining 
feasibility,  all  of  the  costs  which  enter  into  the  completely  developed 
farm  must  be  taken  into  account,  including  the  price  of  the  raw, 
unimproved  land,  the  cost  of  irrigation  construction,  the  cost  of 
delayed  agricultural  development,  and  the  cost  of  farm  land  improve- 
ment. Land  qualities,  including  all  of  the  physical  and  economic 
factors  that  effect  net  returns  should  be  given  the  most  careful  atten- 
tion. It  is  through  the  exclusion  of  lands  of  inferior  quality  that 
irrigation  expansion  can  be  kept  within  economic  limits. 

In  the  past,  many  errors  have  been  made  in  providing  expensive 
construction  for  lands  which,  when  improved,  would  not  justify  the 
expense  of  development.  Soils  often  vary  a  great  deal  in  the  same 
projects.  The  total  potential  value  of  all  of  the  soils  should  be  the 
basis  for  deciding  whether  the  project  should  or  should  not  be  built. 
The  feasibility  should  not  be  based  merely  upon  the  profit  anticipated 
from  the  best  soil.  If  the  project  is  justifiable  there  is  still  the  problem 
of  distributing  the  costs  of  construction  over  the  poorer  soils.  Many 
disappointments  have  been  caused  by  the  methods  of  distribution  of 
costs  that  were  not  expected  when  the  landowners  voted  to  undertake 
the  construction  of  the  project.  This  phase  of  irrigation  should  be 
turned  over  to  trained  agriculturists. 


96  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

The  location  of  the  project,  the  climate,  markets,  transportation 
facilities,  type  of  agriculture  suited  to  the  locality,  and  other  location 
factors,  make  special  regional  studies  necessary.  Isolated  projects 
containing  good  land  develop  slowly.  Few  people  pass  through  the 
area,  consequently  the  public  does  not  know  of  the  existence  of  the 
project.  Those  located  on  the  main  highways  of  the  state  are  known 
to  nearly  everybody.  Paid  advertising  can  never  accomplish  what 
can  be  done  by  showing  the  people  who  pass  through  the  project  what 
is  being  accomplished.  Most  of  the  new  projects  are  not  on  the  high- 
ways. They  have  poor  roads,  and  if  far  from  transportation,  the 
expense  involved  in  getting  the  crops  to  market  may  be  large.  Rail- 
road facilities  are  a  big  help  to  agricultural  development.  Transpor- 
tation and  markets  should  be  carefully  investigated. 

The  climatic  conditions  in  the  area  to  be  irrigated  cannot  be  too 
carefully  considered.  A  short  growing  season  means  limited  crop 
adaptability  and,  therefore,  usually  means  land  that  will  not,  when 
fully  developed,  have  a  high  market  value.  Some  localities  are  greatly 
retarded  by  the  occurrence  of  periodic  frosts.  To  produce  an  irrigated 
crop  involves  a  large  per-acre  cost.  A  few  crop  failures  may  cause 
financial  failure  to  many  settlers,  especially  among  those  who  are  just 
beginning.  Certain  sections  of  the  state  produce  poor  crops  of  certain 
high-priced  products  and  attempt  to  compete  commercially  with  more 
favored  localities  that  produce  better  and  larger  crops. 

California  agriculture  has  enjoyed  unusual  prosperity.  Because 
much  of  the  land  is  suited  to  high-priced  crops,  the  tendency  has  been 
to  convert  general  crop  lands  into  high-priced  fruit  and  truck  lands 
as  fast  as  possible.  Settlers  no  doubt  have  expected,  when  developing 
their  land,  ultimately  to  produce  such  crops.  This  probably  has 
stimulated  settlement.  So  rapid  has  been  the  increase  in  fruit 
acreage  that  today  40  per  cent  of  the  irrigated  area  is  planted  to  trees 
and  vines,  which  raises  the  question  whether  California  agriculture 
can  in  the  future  maintain  the  same  degree  of  prosperity.  The  con- 
sideration of  the  possibility  of  overproduction  is  highly  essential  in 
the  planning  of  irrigation  works.  Not  only  should  crop  adaptability 
be  studied,  but  the  future  outlook  for  the  principal  crops  should  be 
determined. 

One  of  the  most  effective  means  of  reducing  the  lag  of  agricultural 
development  behind  irrigation  construction  is  to  check  the  promotion 
of  poorly  conceived  projects.  This  can  be  done  by  more  careful  con- 
sideration of  the  elements  of  feasibility.  The  projects  that  do  not  show 
a  good  margin  of  profit  on  paper  are  apt  to  be  financially  unsuccessful 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND    IRRIGATION  97 

and  should  be  discouraged.  Good  projects,  well-constructed  and 
properly  designed,  develop  rapidly.  It  is  the  poorly  conceived  ones 
that  lag  along  and  decline  in  prosperity.  The  State  Bond  Certification 
Commission  is  now  concerned  primarily  in  the  probable  repayment  of 
principal  and  interest  of  bonds.  The  limits  of  their  authority  should 
be  extended  to  safeguard  the  interests  of  the  settlers,  as  well  as  those 
of  the  investors  in  the  bonds.  A  project  may  be  an  economic  failure 
without  a  single  delinquency  in  the  repayment  of  bond  principal  and 
interest.  Reports  on  the  feasibility  of  projects  should  include  a  plan 
of  repayment  by  the  farmers  and  should  set  forth  the  conditions  under 
which  all  of  the  costs  incident  to  farm  purchase  and  development  can 
be  paid.  All  estimates  of  cost  must  be  made  with  due  consideration 
of  price  trends.  Not  only  must  the  short-time  swings  in  prices  be 
anticipated,  but  where  a  great  number  of  years  may  be  consumed  in 
carrying  out  the  development,  the  long-time  swings  in  the  general 
price  levels  of  materials  and  of  commodities  to  be  sold  by  prospective 
farmers  must  be  taken  into  account.  Since  uncertainties  exist  because 
of  difficulty  in  making  forecasts  of  prices,  factors  of  safety  must  be 
employed.  An  economic  analysis  is  just  as  difficult  as  the  design  of 
irrigation  structures  and  just  as  important.  Engineering  reports 
should  be  supplemented  by  economic  reports.  The  importance  of 
economic  studies  in  connection  with  feasibility  studies  is  now  generally 
recognized  but  we  are  still  greatly  handicapped  by  the  want  of  basic 
economic  data.  Years  of  research  in  the  engineering  field  places  at 
the  command  of  the  engineer  a  large  amount  of  information  which 
forms  the  basis  of  more  or  less  exact  determinations.  Economic 
estimates  are  of  necessity  too  general. 

The  difficulty  in  the  past  has  been  that  although  the  importance  of 
the  factors  of  feasibility  enumerated  has  been  realized,  the  relative 
importance  of  the  various  items  has  not  been  measured.  The  develop- 
ment of  a  basis  for  applying  a  means  of  measurement  of  these  factors 
to  feasibility  investigations  will  mark  a  new  era  in  scientific  analysis 
of  project  feasibility. 

Land-Settlement  Policy 

It  is  not  within  the  scope  of  this  bulletin  to  discuss  the  problems 
involved  in  formulating  and  carrying  out  a  policy  of  planned  develop- 
ment. By  planned  agricultural  development  is  meant  the  working  out 
of  details  of  rural  communities  on  the  same  basis  as  that  on  which 
engineering  projects  are  designed,  that  is,  the  best  available  scientific 
and  practical  knowledge.    Estimates  are  made  and  financial  programs 


98  UNIVERSITY    OF    CALIFORNIA EXPERIMENT    STATION 

worked  out  so  that  capital  available  will  be  equal  to  capital  require- 
ments. One  of  the  most  important  features  of  planned  development, 
then,  is  the  matter  of  credit  for  farm  improvement.  The  principal 
features  of  the  California  Land  Settlement  plan  which  has  been  under 
rigid  test  during  the  past  few  years  are  (1)  a  small  first  payment  of 
purchase  price  is  made  by  the  settler,  (2)  low  interest  is  charged, 
(3)  a  long  time  is  allowed  for  repayment,  (4)  loans  are  advanced  for 
farm  improvement  and  purchase  of  livestock,  (5)  settlers  are  selected 
according  to  their  fitness  to  farm,  and  (6)  advice  and  direction  are 
given  for  carrying  out  the  farm  program  and  careful  inspection  of 
operations  is  practiced.  More  knowledge  is  needed  concerning  the 
actual  practical  working  out  of  this  plan  in  the  two  settlements  at 
Durham  and  Delhi.  Scientifically  analyzed  facts,  unbiased  by  personal 
prejudices,  should  be  compiled. 

There  is  a  wide  difference  of  opinion  regarding  the  agricultural 
credit  problem  especially  in  relation  to  credit  for  agricultural  develop- 
ment. In  the  past  thirteen  years,  many  improvements  have  been  made 
in  the  banking  facilities  of  the  country.  Through  the  Federal  Reserve 
Act,  adopted  December  23,  1913,  the  Federal  Reserve  System  was  put 
into  operation.  July  17,  1916,  the  Federal  Farm  Loan  Act  was  passed 
organizing  the  Federal  Land  Bank  System  and  through  amendment 
to  this  act  in  1923,  the  Intermediate  Credit  Banks  were  organized. 
So  much  has  been  done  to  improve  our  banking  situation  that  people 
are  of  the  opinion  that  no  more  banking  facilities  are  needed.  The 
Federal  Farm  Loan  Act  has  not  helped  the  tenant  farmer  or  project 
settler  appreciably.  The  act  does  help  established  farmers  to  obtain 
credit  at  lower  rates  of  interest  and  on  the  long-time  repayment  plan 
if  they  have  a  large  equity  in  their  farms,  but  since  the  bank  loans 
but  50  per  cent  of  the  appraised  value  of  the  land,  settlers  improving 
raw  land  are  not  eligible  for  loans.  The  Intermediate  Credit  Bank 
makes  loans  to  cooperative  associations  secured  by  warehouse  receipts 
on  commodities,  or  it  discounts  agricultural  paper  of  National  and 
State  Credit  Corporations.  This  paper  may  be  upon  livestock  or 
agricultural  products,  and  in  this  connection  serves  to  finance  current 
operations  of  the  farmer.  Credit  for  agricultural  production  can  be 
obtained  from  the  local  commercial  banks,  but  commercial  banks  are 
not  suited  to  agricultural  loans  that  may  not  be  repaid  at  harvest. 

A  great  amount  of  detailed  study  is  needed  to  determine  the 
essentials  of  a  safe  credit  policy  for  agricultural  development.  The 
problem  is  different  from  that  of  ordinary  agricultural  credit.  More 
information  is  needed  concerning  the  safety  of  loans  for  farm  improve- 


BUL.  435]  AGRICULTURAL   DEVELOPMENT   AND   IRRIGATION  99 

ment  where  close  supervision,  selection  of  settlers,  and  the  other 
features  of  such  a  plan  take  the  place  of  a  certain  amount  of  the 
security  usually  required  in  the  making  of  commercial  loans  which 
rarely  exceed  50  per  cent  of  an  appraised  value.  More  information 
is  also  needed  concerning  the  advancing  of  credit  even  more  liberally 
than  was  granted  under  the  California  Land  Settlement  Act.  It  is 
contended  by  some  that  these  advancements  of  credit  were  too  liberal. 
There  is  a  great  amount  of  evidence  that  the  act  was  in  the  right 
direction.  We  have  not  sufficient  proof,  however,  as  to  whether  exten- 
sion of  credit  was  too  liberal  or  not  liberal  enough.  Capital  require- 
ments so  frequently  exceed  the  amount  possessed  by  the  settler,  that 
even  the  generous  terms  of  this  act  may  not  have  provided  funds 
sufficient  for  economic  development. 

Those  engaged  in  the  study  of  farm  management  and  production 
economics  as  applied  to  agriculture,  and  many  workers  in  land  settle- 
ment, are  coming  to  realize  the  importance  of  the  farm  organized  on 
the  basis  of  best  combinations  of  enterprises  and  the  most  economical 
combinations  of  capital,  land  area,  and  labor.  Usually  the  combination 
which  is  most  efficient  is  one  which  requires  large  amounts  of  capital 
to  finance  the  purchase  of  land,  equipment,  and  livestock.  Enterprises 
based  solely  on  the  size  of  the  purchaser's  pocketbook  are  likely  to  be 
inefficiently  organized  and  will  have  difficulty  in  competing  with  farms 
which  are  more  efficiently  planned  and  financed.  There  is  some  ques- 
tion as  to  the  relative  safety  of  mortgage  loans,  made  on  the  basis 
of  50  per  cent  of  the  conservative  appraisal  regardless  of  capital 
requirements,  as  compared  with  larger  loans  made  on  the  basis  of 
capital  requirements  for  maximum  efficiency,  safeguarded  by  a  con- 
tract outlining  the  general  program  to  be  followed.  Whatever  may 
be  the  safe  credit  policy,  more  study  should  be  given  its  desirability 
apart  from  its  safety.  Some  attention  should  be  given  to  the  extent 
to  which  advice  and  direction  can  be  given  and  to  what  are  the  most 
economical  programs  of  farm  development  and  operation,  and  to  the 
cost  of  maintenance  of  such  programs.  A  careful  study  should  be 
made  of  the  improvements  which  can  be  made  in  the  existing  organ- 
ization for  land  settlement  which  was  really  created  for  experimental 
and  demonstrational  purposes,  and  if  this  organization  is  found 
inadequate  for  a  permanent  program  of  rural  development,  then  a 
study  should  be  made  to  determine  the  proper  institution  through 
which  land  settlement  can  be  administered  and  financed.  Until  these 
and  other  studies  have  been  completed,  it  will  be  very  difficult  to 
formulate  any  policy  directed  at  the  improvement  of  present  practices 
of  rural  development. 


